Gold Market Drivers: Geopolitical Risk Backdrop
Gold prices have been on a solid run over the last two months with the futures market logging a roughly 15% gain from the December lows. Rising global uncertainty linked to Trump’s second presidency has been the key driver behind the move higher. However, with trade war risks fading, Israel and Hamas maintaining the ceasefire, and now the prospect of an end to the Russia-Ukraine war, gold prices are pausing for now while traders assess these shifting conditions.
US Data
Away from developments in the geopolitical environment, traders are also monitoring incoming USD data with regard to its impact on the Fed outlook. A weaker showing in Friday’s retail sales data saw US softening, showing that two way risks are still very much active in the market. As such, incoming US data this week will be closely watched with any further weakness likely to feed into fresh USD selling and an uptick in gold.
Fed Easing Expectations
Fed rate cut expectations have crept up very slightly over the last week with traders now pricing a cut in June from July previously. If this shift strengthens as a result of any further US data weakness, gold prices should find fresh demand. Similarly, incoming news linked to the Israel-Hamas and Russia-Ukraine conflicts will also be closely watched with any sign of deterioration likely to lead to fresh safe-haven demand for gold also.
Technical Views
Gold
For now, gold prices have stalled into the 1.61% fib extension and the bull channel highs. Momentum studies are softening, reflecting risks of a deeper correction here. While price holds above 2,789.40, however, focus is on a continuation higher and a breakout above 2,949.88.
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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.