Gold has drifted lower to now be trading only a little above $1,900 an ounce, some way off the all-time record it was flirting with last week.
While the war in Ukraine is far from being over, with the prospect of a multi-month or even year conflict still very real, the fact both sides have been engaged in peace talks provides ground for hope.
Hope of peace is of course essential for the people of Ukraine and indeed the world but gold has slipped slightly out of favour as the acute fear at the start of Russia’s invasion and the subsequent rush to haven assets, such as gold, has receded.
Russia’s invasion of Ukraine has further exacerbated the inflationary environment given the two countries' importance in the production of a host of metals, grains and other natural resources.
The Fed’s near-certain rate rise makes gold less attractive with its lack of yield as well as strengthening the dollar, with which gold has an inversely correlated relationship.
For now, the short-term outlook for gold looks negative and it will be interesting to see whether the precious metal can hold above $1,900 an ounce to get a sense of how much underlying support remains for gold.
Given that there is a war ongoing in Europe that could quickly escalate into a much broader conflict, gold’s medium-term outlook still looks positive with fresh gains up to $2,000 an ounce impossible to rule out.
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