Gold Lower Amidst Iran Uncertainty
Trump Cancels Attacks
Gold prices remain under pressure on Tuesday, taking their cues from a stronger US Dollar. USD remains bid today despite Trump cancelling planned attacks on Iran today. For now it seems that focus is still very much on hawkish Fed expectations on the back of last week’s hotter-than-forecast US inflation reading. Annualised CPI for April came in at 3.8%, up from 3.3% prior, above the 3.7% the market was looking for. Now back at 3-year highs, inflation is becoming a key threat for the Fed with rate hike expectations jumping accordingly. CME group pricing for a hike this year has now risen above the 50% mark for the first time, jumping from around 30% prior to the release.
Safe-Haven Demand For USD
Along with rising rate-hike expectations, USD also remains supported via ongoing safe-haven demand as traders continue to navigate uncertainty around the Iran war. With negotiations still stalled and the risk of a return to war ever-present, USD is likely to remain supported near-term, keeping gold rice pressured lower. This dynamic is interesting given that gold is typically higher during periods of geopolitical uncertainty. However, with USD tied to oil flows currently, any USD strength is impacting gold lower for now. Near-term, further downside is likely unless we hear a breakthrough in peace talks and any news pointing towards a possible deal.
Technical Views
Gold
For now, the market is sitting on support at the 4.548.82 level and with momentum studies bearish, risks are pointed towards a test of the 4,389.24-level next. Bulls will need to defend this area to prevent a deeper drop down to the 3,898.03-level next.
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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.