Optimism surrounding the continuation of talks between Russia and Ukraine has provided a boost to equity markets and is mirrored by a similar decline on gold.
It will be interesting to see which direction gold ends up taking in April as some of the bullish factors that saw it break above $2,000 an ounce in March start to unwind and the focus may start to switch away from the war in Ukraine and more on the macroeconomic outlook.
The ongoing conflict has provided solid support to gold and other haven assets so any signs of progress on peace talks are likely to see some of that support fade. Furthermore, the inflation headache that is troubling governments and central banks is not going to ease any time soon, with more interest rate hikes expected in April to try and curb rising prices.
These dual headwinds of an unwinding of fear trading and the prospect of rising interest rates making the non-yield bearing asset of gold less attractive make $1,900 an ounce a key indicator for the level of underlying support there is for gold.
It looks likely that gold will soon be pushed down to this threshold and the fragile nature of the current optimism in markets may see a bullish price reaction if and when gold reaches $1,900.
On a much shorter-term outlook, today’s release of the US’ latest jobs and unemployment data will give an indicator of the strength of the world’s largest economy.
With improving numbers expected, any surprises to the downside that show the economic recovery remains jittery could benefit gold while any figure better than forecast will add to the current pressures on the gold price.
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Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News.
As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwash while investing sustainably.
