On Thursday, gold prices dropped to their lowest point in two weeks. This sharp drop occurred as tensions between the US and trading partners began to subside somewhat. As of 0629 GMT, gold was down 1.6% at $3,235.55 per ounce, hitting a low since mid-April. That downturn is due more to market conditions overall, such as the continued strengthening of the dollar and changing investor attitudes towards risk.
The precious metal, traditionally viewed as a safe haven against political and financial instability, has struggled to maintain its allure amid improving trade relations. Gold does well in low-real interest environments. Earlier this year, its prices exploded because of increased perception of risk about the state of the economy. In April, gold reached a series of record highs as investors flocked to safe havens amid global turmoil.
U.S. gold futures followed suit, dropping 2.3%, closing at $3,243.30. It is no surprise then that analysts have pointed to an unprecedented transition in the present market landscape. Worries over the trade war have eased recently, which has pushed gold prices lower.
“Gold retraced as trade war concerns eased, but market confidence remains shaky with investors reacting to headlines daily,” – Ilya Spivak, head of global macro at Tastylive.
Market observers point to the Federal Reserve’s dovish policy outlook as a source of future support for gold. They feel that the metal still needs to recoup from its April panic. Only then will it finally begin to go up in a meaningful way.
“The Federal Reserve’s dovish policy outlook could support gold, but it may need to unwind more of the April panic first,” – Ilya Spivak.
Leave a Reply