In the early hours of Monday, gold dropped below $4,100 to trade at its lowest level since late November. The move extended a decline which began late last week after support around $5,000 per ounce finally crumbled.
Early this morning, the precious metal edged past $4,600 but then pulled back. Gold’s initial sell-off was linked to recent strength in the US dollar. Many investors were surprised that it was the greenback, rather than gold, which was sought out as a haven amid the outbreak of hostilities across the Middle East.
Source: TN Trader
But gold’s parabolic rise at the end of January, followed by its dramatic collapse, meant it was no longer viewed as a safe and solid asset in times of uncertainty. Could this week’s early flush-out now set the stage for a rethink? Well, there’s still plenty of price volatility. But the bulls may be encouraged by the pullback in the dollar, and as gold has managed to push back comfortably above $4,400.
On the other hand, many investors are no longer expecting rate cuts this year from the Fed, and some think the next move could be a hike. That may weigh on gold sentiment to some extent.
