Weak Dollar Helps Gold
Gold prices have found a decent bid today with the yellow metal trading in the green across the European morning. Weakness in the US Dollar and heightened geopolitical uncertainty on the back of a Ukrainian drone strike on Moscow overnight mean that gold futures are pushing higher. Fed easing expectations have grown meaningfully over the last week or so as softer US data and heightened fears over the US economy have taken hold. Trump’s warning this week that a US recession cannot be ruled out has clearly spooked investors with US stock markets and the broader risk complex cascading lower.
Safe-Haven Demand
The move has turned demand back to gold as safe-haven inflows soar. Alongside fears over the health of the US economy, traders are nervous on the back of a heavy Ukrainian drone strike on Moscow last night which marked the biggest attack inside Russia in three years. With US/Ukraine peace talks due to begin today in Saudi Arabia, markets are fearful that the attack will have hardened Russia’s position, making a peace deal tougher to negotiate.
US Inflation Up Next
Looking ahead this week, traders will be watching the latest US inflation data due tomorrow. If we see CPI readings cool as expected, gold prices are likely to remain supported as USD continues lower. Any undershooting of forecasts should amplify this dynamic while an upside surprise would likely muddy the near-term view, creating some support for USD. Given the broader backdrop, however, it would likely take a strong upside surprise to upset the current narrative.
Technical Views
Gold
While gold prices remain above the 2,859.15 level, the focus is on a fresh push higher and a breakout above 2,949.88 and the channel highs. Only a downside break of current support will shift that view, turning focus to 2,789.40 as the deeper support to watch. Interestingly, in the Signal Centre today we have a sell limit at 2925.20 suggesting a preference to fade current strength for a reversal lower.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.