Gold rose last week but the size of the recent gains have tapered off as risk sentiment recovered. Will elevated rates weigh on gold or will growth concerns provide support?
Gold volatility has subsided drastically now that the risk of a broader conflict between Israel and Iran have been greatly reduced. Riskier assets like themanaged to claw back prior losses as risk sentiment improved. As a result, gold’s former safe haven bid has had the wind taken out of its sails.
The precious metal may soon have to face the reality of the Fed funds rate remaining higher for longer afterIncreasing attention has been placed on shorter-term measures of price trends like the month-on-month comparisons, which has been rising – which hasn’t gone unnoticed at the Fed.
Gold bounced off of support at $2320 – a prior swing low. If prices remain above this level, the bullish continuation remains constructive. However, in the absence of a catalyst, the upside potential may be greatly reduced.Gold market trading involves a thorough understanding of the fundamental factors that determine gold prices like demand and supply, as well as the effect of geopolitical tensions and war.
Scheduled risk events include the FOMC meeting where there is no realistic expectation of a change to interest rates but markets will be focused on how concerned officials are regarding the re-acceleration of inflation that has emerged since the start of the year.
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