Gold prices are trading nearly flat at the start of the European session. The precious metal continues to find support from heightened geopolitical tensions, which bolster its appeal as a haven asset. Additional support is coming from the announcement over the weekend by the People's Bank of China that, after a prolonged hiatus, it has resumed gold purchases. Completing the trio of positive factors, expectations that the Federal Reserve will cut interest rates later this month have solidified among traders, limiting the upside for Treasury yields and favouring the non-yielding precious metal. However, gold bugs face some headwinds as well. The US dollar gained renewed strength following last Friday's better-than-expected non-farm payroll data, presenting a challenge for gold prices due to the inverted correlation between the two assets. At the same time, there is speculation that the incoming administration may impose higher tariffs on imports from key trading partners and drive inflation higher, potentially forcing the Fed to slow its pace of rate cuts. In this context, tomorrow's release of US inflation data is expected to play a pivotal role in shaping gold prices. Analysts forecast an uptick in consumer prices, which could further fuel the narrative of a dollar resurgence and weigh on gold. Conversely, lower-than-expected inflation figures could lend support to bullion prices.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.
All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.