Gold prices rose on Tuesday, consolidating gains above the key psychological level of $3,000 an ounce and reaching a fresh all-time high. Demand for the precious metal remains strong as traders continue to seek safe-haven assets. The market seems to be looking for insurance vis-à-vis the potential impact of the latest US policies, amid the growing likelihood of a US recession. A string of recent economic data—including inflation, business sentiment, and retail sales—has fallen short of expectations, reinforcing signs of a slowdown in the world’s largest economy. Against this backdrop of economic fragility and heightened geopolitical uncertainty, gold demand is expected to remain elevated. At the same time, the slowing US economy is fuelling expectations of at least three Federal Reserve rate cuts this year, intensifying the focus on tomorrow’s FOMC meeting. Any dovish signals are likely to weaken the dollar further, creating a dynamic that supports gold prices due to the inverse correlation between the two assets.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
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