Gold prices fell in early European trading, approaching the $3,320 level, as risk appetite surged across financial markets. Optimism over the prospects of a ceasefire and a permanent resolution to the ongoing Israel–Iran–US conflict, reducing the risk of further escalation, drove broad-based gains in equity markets and weighed on haven assets such as gold. Against this backdrop, further downside is possible for the precious metal if optimism remains elevated, with the $3,300 level emerging as the next significant support. However, the downside is likely to be limited by lingering concerns over the potential stagflationary impact of tariffs on the global economy, ongoing central bank bullion purchases, geopolitical turbulence in Eastern Europe, and expectations that the Federal Reserve may soon begin cutting rates. Traders will closely monitor Jerome Powell’s testimony to the US Congress later today, looking for clues about the Fed’s rate path. Should the Fed chairman strike a more dovish tone, a July rate cut would appear more likely—potentially weakening the US dollar further and offering support to gold prices due to the inverse correlation between the two assets.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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