Gold Declines, but Bullish Trend Remains Intact
The gold (XAU/USD) price declined by 0.66% during a very volatile trading session on Thursday as traders weighed the impact of US President Donald Trump’s trade tariffs on the world economy.
Yesterday, XAU/USD fluctuated within a broad range of $3,054–3,167 as market participants were uncertain about its next move. Overall, sellers dominated the market. According to Reuters, traders attributed the dip to some profit-taking and margin calls in other assets, prompting investors to sell some gold to cover losses.
"People were selling profitable positions to cover those margins, but I think in the long-run they’ll continue to look for safe-havens, and gold is certainly that", said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Trump’s tariffs triggered a sharp decline in equity indices because of concerns they could dampen economic growth. Still, the long-term bullish trend in gold remains intact as structural demand for safe-haven assets remains very strong.
In addition, there is a sense that the US economy is slowing down, especially after yesterday’s weaker-than-expected ISM Services Purchasing Managers Index (PMI). Thus, traders continue to expect the Federal Reserve (Fed) to deliver at least two or possibly three rate cuts by the year’s end. This exerts additional bullish pressure on the bullion. Furthermore, central banks are projected to continue buying gold as they seek to reduce their US dollar holdings due to policy risks associated with the Trump administration. All these factors support the gold price.
XAU/USD fell slightly during the Asian and early European trading sessions. Today, traders should monitor any new developments around trade tariffs. Today’s main event is the US Nonfarm Payroll report at 12:30 p.m. UTC. The market expects the number of jobs created to increase by around 135,000 in March and hourly earnings to grow by 3.9% annually. If the NFP report reveals stronger-than-expected results, XAU/USD may pull back slightly. Weaker-than-expected NFP data may give a minor boost to gold.
"Spot gold may revisit its 3 April low of $3,054 per ounce as a correction from $3,170 looks incomplete", said Reuters analyst Wang Tao.
Worries Over Weakening US Economy Boost Euro
The euro (EUR/USD) rocketed by 1.8% against the US dollar (USD) on Thursday, reaching a new six-month high and recording one of the best daily performances in recent history.
After Donald Trump’s administration announced new tariffs, investors assessed their potential effects on global trade and economic expansion. Thus, the US Dollar Index (DXY) fell below the key 102.00 level, leading to gains in other currencies. The unexpectedly severe tariff announcement triggered market turmoil, causing global stocks to plummet. Investors seek refuge in safe-haven currencies like the Swiss franc and the Japanese yen.
"What the FX market is telling you is that US growth is going to suffer and that US-built systems are falling apart in global trade. The US dollar was the most crowded trade in the world coming into the year. And today, the knee-jerk reaction to tariffs is to sell everything. Any trade that was crowded is thinning out, and that includes the dollar", said Adam Button, chief currency analyst at ForexLive.
Deutsche Bank, Germany’s largest commercial bank, warned on Thursday about the risk of a crisis of confidence in the US dollar. Indeed, the de-dollarisation trend may accelerate as the US trade partners retaliate with their own tariffs and global dollar-denominated trade declines. Thus, EUR/USD may continue to rise, not because of the underlying strength of the eurozone economy but because of a more structural shift in global financial flows.
EUR/USD rose during the Asian and early European sessions and is now trading comfortably above 1.10000. The upcoming US Nonfarm Payroll (NFP) report at 12:30 p.m. UTC will likely significantly impact the market. Given its potential to influence interest rate expectations and investors’ sentiment, we expect sharp price movements in various financial instruments, including EUR/USD.
However, the market focus on global trade tariffs could limit NFP’s influence on market movements. If the data reveals stronger-than-expected results, EUR/USD may pull back slightly. Weaker-than-expected numbers may drive the pair higher. Key levels to watch are resistance at 1.11000 and support at 1.10400.
Bitcoin Rose on the Back of Tariffs Announcement
The Bitcoin (BTC) price rose by 0.83% on Thursday despite a sharp decline in the US stock market indices, which usually correlate positively with BTC.
Yesterday’s stock market volatility, driven by escalating concerns over the potential economic fallout from trade tariffs, triggered investors’ panic. This flock to safety likely contributed to Bitcoin’s relatively stable price, as some investors sought alternative hedges against market uncertainty. While traditional safe-haven assets like gold and bonds saw increased demand, digital assets may have also attracted some of those seeking to mitigate risk.
Fundamentally, the cryptocurrency market now stands at a pivotal moment as it navigates challenging macroeconomic conditions and evolving institutional investment trends. Institutional outflows from Bitcoin ETFs, particularly from ARK 21Shares (NYSE:ARKB) and Fidelity (NYSE:FBTC), suggest a cooling of risk appetite, said Piyush Walke, derivatives research analyst at Delta Exchange. Technically, crypto markets remain under pressure, mirroring broader economic uncertainty.
BTC/USD remained essentially unchanged during the Asian and early European trading sessions. Overall, traders should keep an eye on any new developments around trade tariffs. Today’s most important report is the US Nonfarm Payroll data, due at 12:30 p.m. UTC. The market expects the number of jobs created to rise by around 135,000 in March and hourly earnings to grow by 3.9% annually. If the NFP data is stronger than expected, BTC/USD may pull back slightly. Otherwise, BTC/USD may receive a minor boost on weaker numbers.
"Bitcoin faces its next resistance at $85,000, with support at $80,500", said Alankar Saxena, co-founder and CTO of Mudrex.