The price of gold compensates some of its losses and these are the precious metal expectations

Gold prices decreased by more than 3% before he recovered some of its gains, with the appetite for risk in the markets improved after the United States and China announced their agreement to reduce customs duties for 90 days, according to the FX Street platform.

A sharp decline in the price of gold against the dollar

Gold was traded against the US dollar at $ 3225 an ounce, after it touched its highest daily level at $ 3326.
The “Wall Street” indicators recorded noticeable gains in the aftermath of the agreement, as Washington and Beijing diluted customs duties to 30% and 10%, respectively, decreased from previous levels of 145% and 125%, according to a joint statement issued by both sides.

Reasons for the decline in gold: the strong dollar and bond returns

The agreement between the two largest economies in the world contributed to supporting the US dollar, which pressed the prices of gold bars used as a safe haven at uncertain times, and pushed them to decline by more than $ 100.

The US dollar index (DXY), which measures the performance of the green currency against a basket of six main currencies, increased by more than 1.25% to 101.74 points, which constituted an additional factor to pressure gold prices.

At the same time, the returns of US Treasury bonds increased, as the revenue jumped on the bonds for a period of seven basis points to 4.453%.
The real returns – which are measured by the returns of protected treasury bonds from inflation – also settled at 2.163%.

Federal and interest rate expectations

The improvement of economic data has reduced investor expectations about reducing interest rates from the federal reserve.
According to the data of the “Prime Market Terminal” platform, traders reduced their bets, provided that the federal reduces the benefit only twice this year, instead of three times.

Investors are now awaiting the issuance of the US Consumer Prices Index report on Tuesday, followed by the producers and retail price index, in search of additional references on monetary policy trends.

Gold is under pressure despite the increased demand

The World Gold Council revealed that the Chinese People’s Bank (China Central Bank) added tinnitus to its reserves during April, continuing a series of purchases for the sixth month in a row.
The Polish National Bank also raised its reserves by 12 tons, to reach 509 tons.

Although gold continued to buy by central banks, the strength of the dollar and the high bond returns made more pressure on the prices of yellow metal.

Technical expectations for gold prices

Gold stopped its upward direction, as prices are prepared to test the lowest daily level recorded on May 1 at $ 3202.
If this level is broken, prices may go about $ 3137, then $ 3100 an ounce.

On the other hand, if gold succeeds in penetrating the 3300 dollar barrier again, it may face the first resistance level at 3350 dollars, followed by $ 3400, which may lead the prices to record new gains.