By Konstantinos Chrysikos, Head of Customer Relationship Management at Kudotrade
Gold rose for a third consecutive session on Tuesday, while Treasury yields continued to decline. Comments from the Federal Reserve’s Chair helped ease market expectations regarding a potentially tighter monetary policy. A continued slide in yields could help lift gold, although ongoing concerns about inflation could remain a source of risks for the metal. At the same time, elevated geopolitical tensions globally could continue to fuel demand for safe-haven assets.
However, investment flows remain unfavourable. Gold-backed ETFs continue to see sustained outflows, with last week alone seeing withdrawals across all major regions with a total of around 34 tonnes. Additionally, reports of significant gold sales by Turkey’s central bank fueled some concerns that other central banks could follow suit to defend their respective currencies, which could weigh on the market.
Looking ahead, gold could remain exposed to the developments in the Middle East and their impact on inflation expectations in the near-term. Additionally, upcoming US economic data could also influence monetary policy forecasts and the performance of gold.
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