Gold prices rebounded from their lowest level in June during early Monday trading and are currently hovering just below $3,300. The precious metal has come under pressure as risk appetite has grown in financial markets following the ceasefire between Israel and Iran, which helped ease geopolitical tensions in the Middle East. Additional support for market optimism came from the US-China agreement on trade and rare earth exports, along with reports suggesting the imminent signing of several other deals between the US and third countries ahead of the 9 July deadline — developments that have improved the global economic outlook. In this context, it is hardly surprising to see weaker demand for haven assets such as gold, which typically face headwinds when investor confidence rises and fears subside. With the improving economic and geopolitical landscape, many investors are taking profits in gold and redirecting capital towards risk-related assets, such as equities, as the main US indices reached all-time highs. Although the short-term outlook for gold appears bearish, several factors continue to limit the downside. These include ongoing uncertainty around the global economic trajectory and growing expectations that the Federal Reserve will implement multiple rate cuts this year — with the first increasingly likely in July. Such a move would weigh on the US dollar, and due to the inverse correlation between the two assets, it would lend support to gold.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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