Gold Breaks Out
Gold prices have broken out to fresh all-time highs ahead of the weekend with the futures market breaking above the 2,949.88 level, now up almost 4% on the week. A mixture of weaker US inflation, trade tariffs and elevated US economic concerns and uncertainty around the prospect of a Russia-Ukraine peace deal are feeding into rising safe-haven demand for gold. The market is now up almost 15% on the year and shows no signs of retreating while e hold above the 2,949.88 level.
Weaker Dollar
The US Dollar remains heavily down from YTD highs, reflecting a shift in Fed outlook in response to recent data weakness. With several key readings seen in decline over the last month, including weaker-than-forecast jobs and inflation data, near-term Fed easing expectations have risen. Traders are now looking for a cut in June followed by at least one further cut ahead of year end.
Trade War & US Recession Risks
Alongside weaker data, fears over the impact of Trump’s tariff war, and the risks of the war escalating further, are also weighing on investor sentiment. With the prospect of a US recession now a key concern, gold prices look likely to remain supported while USD continues lower. Indeed, if we see US data continue to deteriorate, gold prices have plenty of room to advance further as the Fed outlook turns more dovish.
Technical Views
Gold
The rally in gold prices has seen the market breaking out above the 2,949.88 level and the bull channel highs. While above here, the focus is on a continued push higher in line with bullish momentum studies readings. In terms of targets, 3,039.97 marks the 2% Fib extension level of the late 2024 correction with price having recently stalled at the 1.61% level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.