"On one hand, the precious metal continues to benefit from its traditional role as a safe-haven asset amid a tense geopolitical backdrop. On the other hand, rising inflation concerns, fuelled by higher oil prices, are affecting the outlook for monetary policy and limiting further upside."
"While gold-backed ETFs recorded inflows of around 37 tonnes last week, a notable rebound from the modest 2.5 tonnes registered in the previous week, the metal could continue to see large inflows amid persistent geopolitical tensions in Eastern Europe and rising risks in the Middle East."
"Elevated energy prices combined with resilient US economic data have pushed markets to reassess expectations for Federal Reserve monetary policy easing. Markets now largely price in only one rate cut this year, a shift that has lifted treasury yields to multi-week highs and weighed on gold."
Gold hovered near the $5,100 level, influenced by conflicting market forces. Geopolitical tensions in Eastern Europe and the Middle East support gold's safe-haven appeal, with ETF inflows reaching approximately 37 tonnes last week. However, elevated oil prices and strong US economic data have shifted Federal Reserve rate-cut expectations downward to just one cut anticipated for the year. This reassessment has pushed treasury yields to multi-week highs, creating headwinds for gold prices. The upcoming US nonfarm payrolls report will be critical in determining interest rate expectations and gold's subsequent price direction.
#gold-price-dynamics #geopolitical-risk #monetary-policy #inflation-concerns #interest-rate-expectations
Read at London Business News | Londonlovesbusiness.com
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