Gold broke below $4,500 overnight to trade at its lowest level since this time last week. At the beginning of this month, the precious metal looked as if it had found its feet again as it rallied up towards $4,800. But it has struggled over the past fortnight as the US dollar has strengthened and as Treasury yields surged higher on inflationary fears, and on increased speculation of rate hikes this year from the US Federal Reserve.
Source: TN Trader
It’s difficult to see what will happen next. If there were to be an end to the war between the US and Iran, then that would suggest that the US dollar may face some selling pressure (as traders exit their ‘flight to quality’ trade), which should boost gold.
On the other hand, gold may need to retest support around $4,400 before it does anything significant. Traders went into the long holiday weekend with many convinced that the US and Iran would agree on peace terms.
Instead, yesterday morning, the US attacked Iranian positions and ships around the Strait of Hormuz, claiming that they were provoked by Iran’s Islamic Revolutionary Guard Corps. Despite this, there are persistent hopes that the war may soon come to an end, even as it enters its seventeenth week.
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