On Tuesday, after U.S. President Trump gave an interview, gold surged nearly $30, briefly breaking above the $3,380 mark.
Trump's latest interview generated a lot of news, announcing four candidates for the next Federal Reserve chair, removing U.S. Treasury Secretary Mnuchin from the list, and stating that tariffs on semiconductors and pharmaceuticals would be announced next week, warning of an increase in tariffs on Indian goods within the "next 24 hours," and imposing a 35% tariff on the EU if it does not fulfill its obligations.
After last Friday's weak employment report was released, traders increasingly priced in expectations for a Federal Reserve rate cut, assessing the likelihood of a reduction in benchmark borrowing costs at next month's meeting at 93%, and basically expecting at least two cuts of 25 basis points this year. Lower interest rates typically push up the price of non-interest-bearing gold.
Giovanni Staunovo, a commodity analyst at UBS, stated, "Gold prices need to rise from now on, possibly due to U.S. economic data weakening again... Another item that gold is keeping an eye on is whom President Trump appoints as the next Federal Reserve governor, which could be the successor to Fed Chairman Powell."
After the weak employment report was released, Trump fired the head of the Bureau of Labor Statistics, and the news that he would appoint a new Federal Reserve governor added to the uncertainty.
For a long time, gold has been regarded as a safe haven during times of political and economic uncertainty, typically performing well in low interest rate environments.
Kelvin Wong, a senior market analyst at OANDA, said, "Unless there is a very clear catalyst, I still don't think traders will push gold significantly above $3,450."
Due to the escalating trade war and geopolitical conflicts, along with central bank purchases and bets on interest rate cuts, gold prices have risen nearly 30% this year. Investors and analysts expect gold prices to rise further, with Fidelity International predicting that by the end of next year, gold prices could reach $4,000 per ounce.
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