Gold is struggling to establish a decent level of support. It had managed to push back above $4,000 on Friday, having dropped back below $3,960 in the early afternoon. Gold no longer acts as a safe-haven in times of geopolitical uncertainty.
Instead, that role is currently taken by the US dollar. And unfortunately for the gold bulls, a strong negative correlation between the US dollar and gold has built up ever since gold peaked to fresh all-time highs at the end of January, before its price collapsed.
Source: TN Trader
In addition, the crude oil price has surged this month as hostilities between the US and Iran have escalated, effectively shutting down the Strait of Hormuz once again. This has boosted speculation that the Federal Reserve will be forced to hike interest rates this year. Higher rate expectations tend to reduce the appeal of non-yielding assets such as gold.
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