Gold Eased As Optimism Dampens Safe-Haven Demand
Today’s markets analysis on behalf of Konstantinos Chrysikos Head of Customer Relationship Management at Kudotrade
Gold prices slipped on Wednesday, giving back gains from the previous session, as traders consider geopolitical and trade developments. Trump’s Middle East visit could help reduce geopolitical concerns as he announces lifting sanctions in Syria. Hopes of positive developments in Eastern Europe could also weigh on the metal. Russia and Ukraine are set for high-level talks in Istanbul, raising hopes of a potential ceasefire.
At the same time, optimism over US-China trade relations continued to undermine safe-haven demand. The two economic superpowers agreed to temporarily reduce tariffs on each other’s goods for 90 days, easing concerns over the prolonged impact of the trade tensions.
On the investment front, gold-backed ETFs recorded a net outflow of 4.4 tons last week, as investors could move away from gold amid changing market conditions. However, outflows were relatively limited, which could keep the downside pressure in check.
However, gold could find some support from softer US inflation data. The annual US inflation rate eased to 2.3% in April, below market expectations of 2.4%. This lower inflation reading supports the case for Federal Reserve rate cuts, which would favor non-yielding assets like gold.
