Safe-Haven Demand Underpinning Gold
Gold prices are on watch this week as bulls hope to stage a recovery from the correction lower we saw last week. Geopolitical uncertainty linked to the tense scenes between Zelensky and Putin at the White House could see safe-haven demand starting to return. The prospect of achieving an end to the Russia-Ukraine war has been cast in doubt after the scenes over the weekend. Alongside that event, markets are also bracing for Trump to go ahead with planned tariffs on Mexico, Canada and China this week, likely to create deeper safe-haven demand support for gold, particularly if USD continues to weaken as we’re seeing over early European trading on Monday.
US Data on Watch
Looking ahead today, traders will be watching the latest set of US ISM manufacturing PMI readings. Recent data softness has undermined USD and gold prices could gain further ground today if we see fresh weakness in US data. At the top of the week, the latest US labour market readings on Friday will be the headline data event to watch. If jobs data surprises to the downside, this could be firmly bullish for gold, driving a rebuilding of near-term Fed easing expectations. However, if data comes in above forecasts this should see traders pricing out any rate cut in coming months, leading renewed buying in USD, particularly given the anticipated upward inflationary impact from Trump’s trade tariffs.
Technical Views
Gold
The rally in gold has stalled for now into the bull channel highs and the 2,949.88 level with price since correcting lower. The market is currently sitting on support at 2,859.15 and while this level holds, focus is on a fresh push higher. Below here, deeper support and the key pivot for bulls can be seen at 2,789.40.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
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.