In the early hours of Thursday morning, gold fell to $4,024, its lowest level since November last year. This was when gold was well on its way to a fresh all-time high, just below $5,600 at the end of January. But the situation is quite different now.
Back then, investors were still waking up to gold’s potential. Now, it looks as if that potential is now in the rearview mirror. Could that really be the case, or can gold enjoy a renaissance?
Yesterday, the precious metal managed to make some limited upside progress. But it kept running into resistance around $4,100. But then there was a breakthrough. Gold soared as the dollar dropped, as reports came through of significant progress in peace negotiations between the US and Iran.
Source: TN Trader
Most importantly, the news was confirmed by Iranian state media, so investors felt that it was more trustworthy than just relying on President Trump’s bluster. As has been seen since gold topped out and sold off in February, and since the start of this war, precious metals are no longer ‘flight to safety’ assets.
That role currently sits with the US dollar, which has also benefited from stronger US inflation readings and rising expectations for higher interest rates this year. So, should a peace deal be agreed, and should this lead to a significant drop in the US dollar (by no means guaranteed), then gold may pick up as sentiment towards it improves once again. But for now, despite yesterday’s strong rally, it remains in the danger zone.
* The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. To the extent permitted by law, in no event shall Trade Nation (or any affiliate or employee) have any liability for any loss arising from the use of the information provided. Any person acting on the information does so entirely at their own risk. Any information which could be construed as “investment research” has not been prepared in accordance with legal requirements designed to promote the independence of investment research and, as such, is considered to be a marketing communication.
