Gold attracts some buyers for the second straight day as trade jitters and geopolitical tensions ahead of the US-Iran nuclear talks underpin demand for safe-haven assets. Apart from this, a softer US Dollar further supports the bullion, though the underlying bullish sentiment could cap gains. Bulls might also opt to wait for acceptance above the $5,200 mark before positioning for any meaningful appreciating move.
USD/ZAR: Range floor at risk as ZAR richens – Societe Generale
Societe Generale analysts flag that USD/ZAR remains in a sideways consolidation but warn that failure to clear the 50‑day moving average could extend the decline toward lower projections. They add that South African fiscal consolidation supports SAGBs, yet stretched ZAR valuations, reduced SARB carry and a bearish 3‑month risk reversal point to mean‑reversion risks for the currency.
Sideways pattern with downside extension risk
“USD/ZAR has evolved within a sideways consolidation after carving out an interim trough near 15.63 last month. Signals of a large up move are yet to emerge. The 50-DMA near 16.25/16.40, which is also the upper limit of recent range, represents an important hurdle near term.”
“Failure to cross this resistance zone may lead to extension in the phase of decline. A break below the recent pivot low at 15.63 could deepen the down move toward the next projections at 15.45/15.30 and 15.00.”
“In South Africa, FinMin Godongwana is anticipated to reaffirm fiscal consolidation thanks to above forecast tax revenues and the improving growth backdrop. The deficit for this year is on track for 4.5% of GDP target. The political alignment lowers fiscal tail risks so a credible debt path should bode well for further gains in SAGBs.”
“For the ZAR, valuations could be a burden to further appreciation. The REER is approaching 113 compared to a 10-year average of 106. Monetary easing by the SARB is chipping away at carry.”
“In FX options the 3-month USD/ZAR risk reversal has widened to roughly 2.67, more bearish than during last year’s tariff-driven volatility. This signals positioning for mean reversion.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
United States EIA Crude Oil Stocks Change climbed from previous -9.014M to 15.989M in February 20
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USD/INR stays calm in countdown to US-Iran nuclear talks, India’s Q4 GDP
The Indian Rupee (INR) trades flat against the US Dollar (USD) on Wednesday. The USD/INR pair wobbles around 91.00 as the Indian Rupee trades with caution ahead of nuclear talks between the United States (US) and Iran on Thursday and the release of the domestic Q4 Gross Domestic Product (GDP) data on Friday.
Investors will pay close attention to the outcome of the US-Iran nuclear talks, as it would have a significant impact on the oil price. Currencies from countries that rely heavily on imports of oil to fulfill their energy needs remain highly sensitive to the oil price.
The oil price is broadly firm amid tensions between the US and Iran over Tehran’s nuclear plans. Washington wants Iran to give up its intentions of building nuclear facilities, but the latter refuses to do so. US President Donald Trump has also warned of military action in Tehran if it doesn’t drop its nuclear program. Trump threatened Tehran through a post on Truth Social on Monday that it will be a very bad day for the country and its people if they don’t reach a deal.
The absence of a US-Iran deal could boost oil prices by escalating fears of disruption in the global oil supply, a scenario that will be unfavorable for the Indian Rupee.
On Friday, India’s Q4 GDP data is expected to show that the economy expanded at an annualized pace of 7.2%, slower than 8.2% growth seen in the third quarter of 2025.
Meanwhile, the US Dollar (USD) trades lower after US President Trump delivered the longest State of the Union (SOTU) speech in history. While speaking before a joint session of Congress, Trump applauded his economic achievements, called “tariffs” a key reason behind the economic turnaround, touted large tax cuts, criticized the Supreme Court’s recent ruling against his tariff policy, and praised the Venezuela action.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is down 0.2% to near 97.65.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | INR | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.19% | -0.22% | 0.02% | -0.15% | -0.63% | -0.01% | -0.12% | |
| EUR | 0.19% | -0.03% | 0.22% | 0.05% | -0.44% | 0.19% | 0.08% | |
| GBP | 0.22% | 0.03% | 0.27% | 0.07% | -0.41% | 0.20% | 0.10% | |
| JPY | -0.02% | -0.22% | -0.27% | -0.16% | -0.65% | -0.03% | -0.14% | |
| CAD | 0.15% | -0.05% | -0.07% | 0.16% | -0.48% | 0.13% | 0.03% | |
| AUD | 0.63% | 0.44% | 0.41% | 0.65% | 0.48% | 0.62% | 0.52% | |
| INR | 0.00% | -0.19% | -0.20% | 0.03% | -0.13% | -0.62% | -0.11% | |
| CHF | 0.12% | -0.08% | -0.10% | 0.14% | -0.03% | -0.52% | 0.11% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Broadly, the US Dollar trades stably amid firm speculation that the Federal Reserve (Fed) will leave interest rates unchanged in its monetary policy meetings in March and April. The Fed is unlikely to make any monetary policy adjustment in the near term, as price pressures have remained above the central bank’s 2% target for a longer period.
Technical Analysis: USD/INR holds above crucial 20-day EMA
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USD/INR trades flat at around 91.00 as of writing. The pair holds marginally above the 20-day Exponential Moving Average, keeping a cautious bullish bias in place while upside momentum remains contained. Price action has stabilized after the early-month surge, and the flattening of the 20-day EMA reflects a moderating trend rather than an outright reversal.
The 14-day Relative Strength Index (RSI) continues to wobble inside the 40.00-60.00 range, demonstrating signs of volatility contraction.
Immediate support emerges at the 20-day EMA near 90.94, with a break below exposing the recent reaction low at 90.58 and then the February 3 low at 90.15 as deeper support. On the topside, initial resistance stands at the January 22 low of 91.35, followed by the January 28 low of 91.66.
(The technical analysis of this story was written with the help of an AI tool.)
Indian economy FAQs
Oil: Middle East risks and energy price swings – Rabobank
Rabobank’s Senior Global Strategist Michael Every underlines that escalating geopolitical tensions could drive significant volatility in energy markets. He points to rising frictions involving Iran, Israel and the US, and suggests conflict timing remains uncertain. Every argues that once hostilities begin, the impact on energy prices will be notable, with scenarios ranging from sharply higher to sharply lower Oil benchmarks depending on the outcome.
War risk clouds crude price outlook
“In the Middle East, 11 US F-22s are now on the ground in Israel, as Reuters reports Iran is close to buying Chinese supersonic anti-ship missiles.”
“Embassies are sending warnings to their citizens around the region; Turkey is preparing to prevent an Iranian refugee surge at its border.”
“It remains to be seen when this war might begin –today, or after market close Friday?– or what then happens, but such an outcome looks more likely than a sudden Peace For Our Time deal.”
“Either way, the impact on energy prices will be notable – either sharply up or sharply down.”
“Russia threatened the UK and France with nuclear strikes after alleging the pair were trying to get a nuclear weapon or dirty bomb to Ukraine: the financial media didn’t notice. It warned of plots to destroy gas pipelines through the Black Sea, following that of the Druzhba oil pipeline to Slovakia this week, which the financial media also didn’t notice.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
AUD/JPY holds gains above 110.00 following Australia’s CPI data
AUD/JPY extends its gains for the second successive session, trading around 110.10 during the Asian hours on Wednesday. The Australian Dollar (AUD) receives support against its major peers as hotter-than-expected Australian inflation data fueled expectations of additional interest rate hikes by the Reserve Bank of Australia (RBA) this year.
Australia’s Consumer Price Index (CPI) rose 3.8% year-over-year (YoY) in January, matching the previous reading and exceeding market expectations of 3.7%. The CPI increased 0.4% month-over-month (MoM) in January, easing from 1.0% previously. The RBA’s Trimmed Mean CPI for January rose 0.3% MoM and 3.4% YoY, respectively.
Traders will likely observe the speech from the Reserve Bank of Australia (RBA) Governor Michele Bullock, who is set to speak at a fireside chat at the Melbourne University Faculty of Economics & Business Foundation Dinner in Melbourne, Australia.
The AUD/JPY cross also gained ground as the Japanese Yen (JPY) declined sharply after the Mainichi Shimbun reported that Japanese Prime Minister (PM) Sanae Takaichi expressed concerns about further interest rate hikes during her meeting last week with the Bank of Japan (BoJ) Governor Kazuo Ueda. However, BoJ Governor Ueda stated that the discussion broadly covered economic and financial developments, adding that the Prime Minister made no specific monetary policy requests.
Japanese PM Takaichi is known for her pro-stimulus stance, backing expansionary fiscal measures and accommodative monetary policy. Her position clouds the outlook for BoJ rate hikes, amid speculation the central bank could resume policy normalization later this year.
Economic Indicator
Consumer Price Index (YoY)
The Consumer Price Index (CPI), released by the Australian Bureau of Statistics on a monthly basis, measures the changes in the price of a comprehensive basket of goods and services acquired by household consumers. The indicator is the primary measure of headline inflation after a new methodology was applied to transition from quarterly to monthly readings, applying to data from April 2024 onwards. The YoY reading compares prices in the reference month to the same month a year earlier. A high reading is seen as bullish for the Australian Dollar (AUD), while a low reading is seen as bearish.
Australia CPI expected to point to sticky inflation, supporting hawkish stance
Australia will release its key set of inflation figures for the month of January on Wednesday, with the Consumer Price Index (CPI) expected to rise by 3.7%, slightly lower than the 3.8% in the last month of 2025.
What really matters in Australia’s inflation data?
If you’ve ever felt slightly lost when looking at Australia’s inflation numbers, you’re not alone. In contrast to the US, where a single CPI print often dominates the narrative, Australia presents a variety of factors, each with varying weights.
The headline figures come from the Australian Bureau of Statistics (ABS). The quarterly CPI is the full basket, the comprehensive snapshot, and ultimately the anchor for policy decisions at the Reserve Bank of Australia (RBA). When that number lands meaningfully above or below expectations, markets listen.
But in between those quarterly releases, we now get the monthly CPI indicator: It is more of a pulse check than a full medical exam. It does not cover the entire basket, yet it gives traders an early sense of whether inflation momentum is building or fading. In practice, it has become a positioning tool ahead of the bigger quarterly print.
Still, if you really want to understand how the RBA is thinking, you need to look beneath the headline.
The Trimmed Mean is the measure policymakers care about most. It strips out the most extreme price moves, both up and down, to get closer to the underlying trend. Petrol can fall, and electricity rebates can distort the top line, but if the trimmed mean is not easing, the RBA is unlikely to relax. That is the number that shapes the medium-term policy path.
There is also the Weighted Median, another core gauge that smooths volatility in a slightly different way. It usually remains unnoticed, but when it moves in the same direction as the trimmed mean, it reinforces the message.
For markets, and especially for Australian Dollar (AUD) traders, the distinction is crucial. Headline CPI can spark an immediate move. But it is the trajectory of underlying inflation that determines whether rate expectations shift in a lasting way.
So on Wednesday, the real question will not simply be whether inflation ticks up or down. It will depend on whether the core story is finally turning or whether price pressures remain sticky enough to keep the RBA cautious for longer.
The RBA remains cautious
In its quarterly Statement on Monetary Policy (SMP), released alongside the February rate decision, the RBA made a subtle but important shift. Instead of markets pricing in another cut, the bank is now working off a technical assumption of around 60 basis points of hikes this year, a clear reversal from November.
It also questioned whether policy is still restrictive after last year’s three cuts, noting that some indicators now point to slightly accommodative conditions, a marked change in tone.
In addition, growth forecasts were lifted to 2.1% by June, helped by stronger consumption and investment. However, inflation is becoming increasingly difficult to control. Indeed, the Trimmed Mean is seen increasing to 3.7% by mid-year, with core inflation receding a tad to 2.6% by mid-2028, still above the target midpoint. Headline inflation is projected to peak at 4.2%, partly due to the expiry of electricity rebates.
Overall, the message is clear: firmer growth, more persistent inflation, and less certainty that rates are heading lower.
So far, market participants expect nearly 39 basis points of tightening by the RBA this year, although the central bank is seen keeping its Official Cash Rate (OCR) unchanged at 3.85% in March.
What to expect from Australia’s inflation rate numbers?
Pretty solid fundamentals in Oz and a healthy labour market plot against any aspiration of inflation losing significant momentum, at least in the short-term horizon. Against that backdrop, inflation in Australia should remain sticky and above the bank’s target range for now, further propping up the rally in the AUD.
January CPI is forecast at 3.7%, while the Trimmed Mean CPI is expected to rise 3.3% YoY, unchanged from the previous month.
Pablo Piovano, Senior Analyst at FXStreet, notes, “If the bullish bias comes back, AUD/USD could rise to the 2026 ceiling at 0.7147 (February 12), closely followed by the 2023 high at 0.7157 (February 2).”
On the flip side, Piovano adds that “a breach below the February low of 0.6897 (February 6) would expose a drop to the interim 55-day and 100-day SMAs at 0.6821 and 0.6687, respectively, ahead of the 2026 bottom of 0.6663 (January 9) and the key 200-day SMA at 0.6605.”
Momentum indicators remain positive: “The Relative Strength Index (RSI) navigates above the 62 level, and the Average Directional Index (ADX) near 43 is indicative of a strong trend,” he concludes.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
Economic Indicator
RBA Interest Rate Decision
The Reserve Bank of Australia (RBA) announces its interest rate decision at the end of its eight scheduled meetings per year. If the RBA is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Australian Dollar (AUD). Likewise, if the RBA has a dovish view on the Australian economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for AUD.
Last release: Tue Feb 03, 2026 03:30
Frequency: Irregular
Actual: 3.85%
Consensus: 3.85%
Previous: 3.6%
Source: Reserve Bank of Australia
Australian Dollar Price Forecast: Further range bound on the cards
AUD/USD has been having trouble finding its way again in the previous few days after it hit fresh highs of around 0.7150 earlier this month. The Reserve Bank of Australia’s (RBA) hawkish stance, rising inflation, and solid domestic fundamentals all support the positive prognosis for the Aussie Dollar (AUD) in the meanwhile.
The Australian Dollar (AUD) manages to partially set aside Monday’s pessimism, motivating AUD/USD to stage an acceptable comeback and revisit the 0.7070-0.7080 band on turnaround Tuesday.
The pair’s daily bounce comes despite the modest advance in the US Dollar (USD) in a context where trade uncertainty remains on the rise in response to Friday’s US SCOTUS ruling against President Trump’s global tariffs.
Australia: cooling, but not cracking
Australia’s economy is clearly moderating, but the slowdown still looks orderly. This is not an economy rolling over. It is one stepping off the accelerator after running a little too warm.
The February preliminary Purchasing Managers’ Index (PMI) surveys reinforce that view, with Manufacturing at 52.0 and Services at 52.2 remaining comfortably in expansion territory. Not booming, but far from contraction.
In addition, retail spending is holding up, the trade surplus widened to A$3.373 billion at the end of 2025, and Gross Domestic Product (GDP) expanded 0.4% QoQ in Q3, lifting annual growth to 2.1%. That broadly matches what the RBA had pencilled in.
The labour market is steady rather than spectacular. Employment Change rose 17.8K in January, slightly below expectations, while the Unemployment Rate held at 4.1%. That is consistent with gradual cooling, not stress.
Inflation remains the fault line.
The Consumer Price Index (CPI) rose 3.8% YoY in December, and the Trimmed Mean came in at 3.3% YoY and 3.4% QoQ in Q4, still above the midpoint of the RBA’s 2% to 3% target band. More strikingly, the Melbourne Institute’s Consumer Inflation Expectations survey jumped to 5.0% in February, the highest since August 2023. That is not a number policymakers can casually dismiss.
Furthermore, credit growth supports the idea that policy is restrictive but not suffocating, as Home Loans rose 10.6% QoQ in Q4 and Investment Lending increased 7.9%. Financial conditions are tight enough to cool demand but not tight enough to stall it.
China: stabiliser, not accelerator
China continues to act as a steady anchor for the Australian Dollar, though it is hardly providing rocket fuel.
The economy expanded 4.5% YoY in Q4 and 1.2% QoQ according to the latest GDP figures, while Retail Sales rose 0.9% YoY in December. Respectable, but not transformative.
The January PMI split is revealing, however, as the Official Manufacturing and Non-Manufacturing slipped into contraction at 49.3 and 49.4, respectively. and the Caixin Manufacturing and Services remained in expansion at 50.3 and 52.3, respectively. Larger state-linked sectors appear softer; smaller private firms are somewhat more resilient.
Additional data saw the trade surplus widen to $114.1 billion in December, yet inflation remains subdued after the CPI rose just 0.2% YoY and Producer Prices fell 1.4% YoY. That is not reflation; it is lingering disinflation.
On the policy front, the People’s Bank of China (PBoC) left the one year and five year Loan Prime Rate (LPR) unchanged at 3.00% and 3.50%, respectively. The tone remains calm and supportive rather than aggressive. Stability over stimulus.
For the Aussie, that means China is not a headwind, but neither is it an ignition source.
RBA: restrictive, not reckless
Earlier this month, the RBA lifted the Official Cash Rate (OCR) to 3.85%, underlining that inflation remains the priority.
Updated projections suggest price pressures will stay above target for much of the forecast horizon. The Minutes were explicit. Without the latest hike, inflation would likely have remained above target for too long. Policymakers judged that risks had shifted enough to justify tightening.
But this is not autopilot. There is no pre-commitment. The path remains data dependent.
Markets are pricing close to 37 basis points of additional tightening this year. Not aggressive, but enough to maintain a yield floor under the Australian Dollar.
Positioning: rebuilding, quietly
Commodity Futures Trading Commission (CFTC) data show non commercial traders lifted net longs to nearly 46K contracts, the strongest since late October 2017.
This does not look like froth. It looks like exposure is being rebuilt.
Open interest rose to around 256.2K contracts, pointing to improving conviction without obvious crowding. There is still room to extend if sentiment firms further.
Investors are stepping back into the Aussie, cautiously but deliberately.
What matters now
Near term: the US Dollar still sets the tempo. Strong US data, renewed tariff rhetoric or geopolitical noise can quickly shift AUD/USD. Domestically, upcoming inflation figures are crucial. If price pressures remain sticky, markets may need to reassess how much further the RBA might tighten.
Risks: the Aussie remains a high beta currency. If global risk appetite deteriorates, if China wobbles, or if the Greenback stages a meaningful rebound, the unwind could be swift.
Technical landscape
In the daily chart, AUD/USD trades at 0.7065. The near-term bias is mildly bullish as spot holds well above the rising 55-day and 100-day Simple Moving Averages (SMAs) near 0.6800, while the 200-day SMA around 0.6600 underpins the broader uptrend. Price has reclaimed the 38.2% Fibonacci retracement at 0.6870 and now trades between the 23.6% retracement at 0.6976 and the swing high region, suggesting buyers maintain control within the current leg measured from the 0.6421 low to the 0.7147 high. The Relative Strength Index (RSI) hovers around 60, consistent with positive but not overstretched momentum, while the Average Directional Index (ADX) eases from elevated readings above 40, indicating a still-established trend that is losing some intensity rather than reversing.
Initial support is seen at 0.6976, where the 23.6% retracement aligns with a recent consolidation area, followed by the 0.6897 horizontal level near the prior breakout zone. A deeper pullback would expose support at 0.6660 and then 0.6593, which sit closer to the rising medium- and long-term SMAs and are expected to attract dip-buying interest if tested. On the upside, immediate resistance comes in at the recent swing high and Fibonacci ceiling at 0.7147, just beneath the horizontal barrier at 0.7158. A daily close above this band would open the way toward 0.7283, with a further extension targeting the higher resistance level at 0.7661 if bullish momentum re-accelerates.
(The technical analysis of this story was written with the help of an AI tool.)
Bottom line: constructive, but not complacent
Australia’s macro backdrop remains resilient. The RBA is restrictive. Positioning is improving. China is stable enough.
That keeps the broader bias tilted to the upside.
But this is not a defensive currency. It performs best when global sentiment is constructive and struggles when risk turns sour. For now, dips are likely to attract buyers as long as the US Dollar stays contained.
If that changes, so does the narrative.
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
Gold declines as US Dollar stays firm, geopolitical tensions persist
Gold (XAU/USD) edges lower on Tuesday as a firmer US Dollar (USD) tempers demand for the precious metal, even as geopolitical and economic risks remain in focus. At the time of writing, XAU/USD trades near $5,175, down around 1.20% on the day.
The mild pullback reflects a bout of profit-taking after Bullion rallied for four consecutive days to its highest level in over three weeks. The recent advance was fueled by fresh uncertainty surrounding US trade policy and escalating tensions between Washington and Tehran.
US tariffs and Iran tensions keep risks elevated
Global trade tensions remain front and center as US President Donald Trump’s new 10% global tariff comes into effect on Tuesday. The measure was announced after the US Supreme Court ruled last week that Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs was unlawful.
While the current tariff stands at 10%, White House officials have indicated that a formal order is being prepared to raise the rate to 15%. The latest shift in US trade policy has also cast doubt over previously negotiated trade arrangements.
The European Parliament has reportedly paused the ratification process for the US-EU trade deal, while India has postponed negotiations to finalize an interim trade agreement with Washington.
On Monday, Trump warned that countries that “play games” would “be met with a much higher tariff, and worse, than that which they just recently agreed to.”
Meanwhile, the risk of potential US military action against Iran continues to mount, with high-level talks scheduled to resume in Geneva on Thursday.
Fed outlook in focus as traders price 50 bps of easing
Elsewhere, fading expectations of near-term Federal Reserve (Fed) interest rate cuts could act as a short-term headwind for the precious metal. However, traders are still pricing in nearly 50 basis points (bps) of easing by year-end, which may help limit deeper losses.
Looking ahead, the US economic docket features the Conference Board’s Consumer Confidence report and a heavy slate of Fed speakers, which could drive moves in the USD and Gold.
Technical analysis: Bulls regain control above $5,100
From a technical perspective, XAU/USD’s outlook has turned constructive following the break above the $5,100 barrier. On the daily chart, the near-term bias remains mildly bullish as prices hold comfortably above the rising 21-day and 50-day Simple Moving Averages (SMAs), both of which continue to slope higher and reflect an intact uptrend despite recent volatility.
The Relative Strength Index (RSI) at 58 has eased from overbought territory and is now hovering in the upper-mid range, suggesting positive but less stretched momentum. Meanwhile, the Average Directional Index (ADX) has softened slightly, indicating the trend remains in place, albeit with moderating strength.
Initial support is seen at the 21-day SMA near $5,030. A sustained hold above this level would keep buyers in control. Stronger support lies at the 50-day SMA around $4,740.
On the upside, immediate resistance stands near Tuesday’s peak around $5,250. A daily close above this level would open the door toward the $5,500 region as the next upside target.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Trade war: Tariff tensions resurface after EU-US setback – Danske Bank
Danske Bank’s Danske Research Team notes that trade tensions remain elevated after the European Parliament postponed ratification of the EU-US trade deal over concerns about Trump’s new unilateral 15% tariff. China is urging Washington to remove unilateral tariffs, India has delayed talks, and the UK is warning of potential retaliation as the new global tariff framework begins at 10%.
EU-US deal delay and global tariff risks
“In Brussels, the European Parliament postponed ratification of the EU-US trade deal amid concerns that Trump’s new unilateral 15% tariff breaches the ‘Turnberry accord’ agreed last summer.”
“Meanwhile, China has urged Washington to remove unilateral tariffs, India has delayed planned trade talks, and the UK has warned that “nothing is off the table” if the US fails to honour their 10% tariff deal.”
“Today, the global tariff will start at 10%, with the administration working towards raising it to 15% under a separate order that Trump has yet to sign.”
“Overnight European time, US president Trump will give the annual State of the Union speech.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)