Gold prices continued to trend in an outlying $3,350 per troy ounce on Tuesday, amid a curious mixture of calamity and opportunity in today’s market. The trade in the precious metals market has largely held above moving averages. It did drop as the US Dollar continued to recover some of its sharp losses from this past Monday. With market reactions evidencing a growing speculative appetite for riskier assets, we have seen more volatility in gold’s price.
Gold saw additional selling pressure on Tuesday as the metal continued to flounder under a strengthening US Dollar. Even with this drop, gold held its ground, closing above all major moving averages on the daily chart. The 20 Simple Moving Average (SMA) provided important support around $3,292.80. Gold is still very volatile these days, but it’s on a slightly bullish path since the last month. It bounces back on the approaching 20 SMA acting as support, showcasing strength.
Beyond the factors directly impacting gold prices, the larger economic picture is playing a big role in guiding the market. As of the last business day in April, new job openings in the United States, just opened that month, soared to 7.39 million. That number not only beat the prior month’s record of 7.2 million but it topped Wall Street’s expectations of 7.1 million openings. This increase in job openings indicates a tightening labor market. These regulatory changes could strengthen investor confidence in the product and influence investor asset allocation decisions.
As a non-yielding asset, gold’s price rises and falls according to economic signals. Perhaps the most important thing to note is that both the 100 and 200 SMAs are located well underneath the 20 SMA. This setup indicates that although momentum may be bullish in the short term, longer-term trends might continue to have bearish pressure. The 20 SMA is climbing, breaking above the now flatlined 100 and 200 SMAs. This powerful movement reinforces its significance as a potential support level during this time of extreme uncertainty.
Today, US President Donald Trump announced a shocking increase in tariffs on all imported aluminum and steel. That means the new rates have skyrocketed to an unbelievable 2%. This negative policy change goes into effect on Wednesday. It’s sure to send shocks through all sectors of the economy and may affect purpose prices, gold included.
The other big thing market observers are watching is inflation metrics. That’s all the more puzzling given that the annual core inflation figure has recently printed at just 2.3% – as compared to 2.7% in April. This figure didn’t live up to market expectations, which were at 2.5%. It’s good news in that it points to lessening inflationary pressures, which will soon have a big impact on monetary policy.
The convergence of these positive and negative economic indicators, coupled with geopolitical developments, is creating a unique investment environment. A speculative mania tide is moving towards more risky assets. Consequently, US indexes are enjoying a rally, which is likely to dampen gold’s luster as a haven asset.