Gold Slides as Safe Haven Buying Moderates
Gold prices fell early on Friday as investors looked to add risk, cutting the safe-haven buying that supported prices despite rising US interest rates. Trading data shows that the majority of commodities have seen a price decline as market factors impact and dynamic of uncertain in the global economy.
Today, Gold for June delivery was last seen down US$8.20 to US$1,959.50 per ounce. The drop comes despite a lower dollar and easing bond yields as investors move to riskier equities, with European markets broadly higher and futures pointing to a higher open on US exchanges.
Still, the price of the metal has been supported by safe-haven buying as Russia’s war on Ukraine continues, bolstering the price of the metal despite the threat of higher US interest rates as the Federal Reserve last week began a series of rate hikes to quell inflation that is running at a 40-year high.
“The most consequential line of thought for gold is the multi-directional tug of war between Fed policy’s impact on rates, inflation, potential hits to economic growth, and Russia’s invasion of Ukraine as well as the current and potential further related economic sanctions as the crisis continues,” Christopher Louney, a commodities strategist at RBC Capital Markets, said in a note.
Bond yields edged down after touching the highest in nearly two years earlier this week. The yield on the US 10-year note was last seen down 0.9 basis points to 2.383%. READ: Bitcoin Plunged to $43,000 on Rising US Treasury Bond Yields
The US dollar weakened, with the ICE dollar index last seen down 0.12 points to 98.67. # Gold Slides as Safe Haven Buying Moderates Earlier today, market analysts reported that Gold was creeping higher, adding to yesterday’s gains which came in risk-averse trade.
The yellow metal remains well supported against the backdrop of high inflation and commodity price surges, not to mention waves of risk-aversion in these highly uncertain times, said Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA.
“It ran into some resistance around $1,960 earlier in the session before pulling back to trade around $1,950. It’s given back a lot of the gains secured earlier this month as traders sought the shelter of a reliable safe haven and inflation hedge amid the Ukraine invasion and sky-rocketing commodity prices.
“But it’s seen firm support around $1,900 even as risk appetite has improved. Upside may be slow as a result of this but equally, I expect this support to remain firm in the absence of significant progress in ceasefire talks”, OANDA analysts said in a note share with Nairalaw.com.
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