Gold prices rose in early trading on Monday, moving above $4,400 and approaching the two-month high reached last week. The precious metal’s positive momentum is being driven mainly by receding expectations that the Federal Reserve will raise interest rates this year. A recent run of weaker-than-expected US economic data, including disappointing employment figures, moderate inflation and a decline in retail sales, is being interpreted as a sign that the world’s largest economy is slowing. This has led a growing number of investors to question the need to increase borrowing costs in a weakening economy. As a result, the US dollar has lost ground against other major currencies, while shorter-term Treasury yields have also fallen, providing support for the precious metal. However, gold’s upside remains capped by uncertainty surrounding the US–Iran conflict. The conflict is keeping oil prices elevated and could bring inflation back to the centre of investors’ concerns, creating a headwind for bullion.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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