Gold emerges as clear winner

Last week, market investors primarily concentrated on the ongoing trade conflict between the United States and the rest of the world. The intensity of this struggle lessened over the weekend due to the Easter holidays.

This topic could become more heated this week as the situation remains unresolved.

In a recent appearance at the Economic Club of Chicago, Fed Chairman Jerome Powell, emphasized the potential economic impacts of US tariff policies, discussing the challenges and risks that global Central Banks are facing.

He noted that the economic effects are highly uncertain, as higher tariffs than anticipated could lead to increased inflation.

Additionally, a recent survey indicated that the likelihood of a recession in the US has jumped by 20%, now standing at 45%.

In Europe, as expected, the European Central Bank (ECB) has lowered its deposit rates by 25 basis points to 2.25%. However, the wording in the accompanying statement has shifted from “restrictive,” indicating a shift from a bias toward monetary easing, suggesting it is now closer to a neutral stance.

Tariff progress and market stability

In terms of progress on the tariff issue, the United States’ engagement in discussions with its major trading partners has contributed to some market stability.

Investors remain optimistic about a possible easing of trade tensions, and the US may think about adjusting its tariff rate increases.

However, as long as tariff uncertainties persist, the ongoing volatility in global financial markets will remain a significant challenge for investors.

GOLD

A key concern for the market seems to be the disagreement surrounding the Federal Reserve’s interest rate decisions. The US President has been outspoken about these decisions, advocating for the Fed to match the European Central Bank by cutting interest rates. Meanwhile, Fed Chairman Jerome Powell is fearful about the impact tariffs could have in driving inflation sharply higher, which has become a point of contention between the two.

The President may be worried about the potential for a recession and stagnation, while the Chairman appears reluctant to lower interest rates due to rising inflationary pressures.

This situation is quite delicate, and if it escalates into a conflict, it could shift sentiment further toward gold, potentially driving its value up and weakening the US Dollar. A resolution does not appear imminent unless Powell opts to resign. The possibility of Powell being dismissed before his term concludes could trigger a crisis, as the Fed operates independently. Donald Trump has previously stated that he believes Powell should be removed from his position without delay.

When asked in a November news conference if he planned to step down, Powell firmly replied “NO.”

The market understands that such a move could lead to legal ramifications and damage the overall credibility of the Fed.

In this situation, gold emerges as the clear winner, having risen nearly 28% this year. As long as there are uncertainties surrounding tariffs and other accumulating issues, gold will continue to attract buyers.

It serves as a hedge against both sustained investor interest due to a weaker USD and the looming threat of rising inflation.

How can the market overlook the substantial purchases by Central Banks, given that their orders are significant enough to disrupt market dynamics? Countries like China, Russia, and Iran have been acquiring gold strategically and they may not face the same liquidity challenges as other Central Banks. When other nations participate in this trend, gold’s upward trajectory can become unstoppable.

Current trends indicate that, based on technical aspects, gold may be due for a correction, with support levels to monitor at $ 3175 and $ 2990.

Nonetheless, I expect gold to gain momentum and rise above $ 3490, potentially reaching the $ 3650 range later this year.

Weekly outlook- April 21-25

#GOLD @ $ 3327- Gold may correct unless it breaks above $ 3355-60 to reach $ 3385. If it moves below $ 3292, it could decline towards $3260-65 zones.

However, the adjustment will largely rely on incoming news related to tariffs.

#EURO @1.1390- Euro may have difficulty rising above the 1.1490-00 range. If it breaks below the support level at 1.1275, it could lead to a test of 1.1210.

Conversely, a break to the upside could open the door to 1.1580.

#GBP @ 1.3294- Pound Sterling might lose its upward momentum if it can’t exceed 1.3385.

However, it must drop below 1.3120 to reach 1.3020, or it could rebound to trade within the range.

#JPY @ 142.17- US Dollar has solid support at 141.10. Only a break below this level could drive it down to 139.70.

On the other hand, there’s potential for an upward movement towards 143.80 or even 144.50.

Copyright Business Recorder, 2025