Metals

Markets appeared to steady themselves last week, with risk assets such as the S&P 500 pressing higher and haven assets taking a backseat.

As far as the gold outlook is concerned, well the precious metal has dropped quick a bit in the last couple of days, but that is still merely a drop in the ocean compared to how much it has gained. Will dip buyers step in as the metal now tests short-term support levels beath the $3300 area?

The momentum behind the move is unmistakable, and it’s clearly deterring any meaningful selling activity from traders or longer-term investors. Against this backdrop, the gold forecast remains bullish, although prices are hitting significant overbought technical levels.

Gold traders were awaiting the outcome of the call between the Presidents of the US and Russia regarding the potential ceasefire agreement for Ukraine. Any positive developments in this regard could undermine haven assets somewhat in favour of riskier assets. So, while the gold outlook is bullish for now, things could change if there are any positive developments in the Ukraine peace talks.

Gold burst to the $3,000 per ounce threshold last week – a landmark moment for the precious metal. After Friday’s breakout, a modest retreat followed as traders pocketed profits, but gold remains perched near its highs as Monday’s European session heads to the close.

Gold has been little changed so far in the day, with all the action taking place in the equities space. Shares on Wall Street took another plunge today, continuing their recent poor form, as President Trump’s comments over the weekend fuelled concerns that the trade war could trigger an economic downturn.

Key events this week, including US CPI data, Federal Reserve Chair Jerome Powell’s testimony, and corporate earnings, could inject further volatility into the markets and impact the gold forecast.

Gold prices are edging higher again, up 0.3% on the session, and on track for a sixth consecutive weekly gain – barring a negative reaction to the upcoming US jobs report. But what’s fuelling this rally, and can it continue? In this gold forecast, we’ll break down the key drivers and potential risks ahead.

With gold making hard work of record highs while copper perks up from its cycle lows, I'm looking for the two to converge over the near term.

Bond yields are unlikely to fall back significantly in the near-term, even if we see a small miss in US inflation data today. This should keep the upside limited for gold. Therefore, we are still quite cautious when it comes to near-term gold outlook, even if we ultimately expect to see gold rising to $3,000 later this year.

Last week I warned that gold’s gains appeared dubious, and that they could sucker-punch bulls. And it seems they did. And while I suspect another leg or two lower, we could find its downside limited when we weigh up the supporting factors for gold.