Gold Prices edged higher, but gains are limited
Gold rose for the third consecutive day today on the retreat of the US dollar and increased tensions between Russia and Ukraine, but the yellow metal remains under pressure on firmer US equities and the speculations of U.S. interest rate hike sooner than expectations.
* Gold extended gains:
Gold prices extended gains for the third day in a row hitting its highest level in a week amid the decline of the Greenback against most major currencies within a correction step. In addition, the investors turned to invest and buying the metal as a safe haven asset after the resumed tensions between Russia and Ukraine. In fact leaders in Ukraine charged that Russia was deepening its intervention in Ukrainian territory by sending new troops to the south-east border.
*Gold remains under pressure:
The Gold prices recovered, however it did not succeeded to break through the psychological level of $1300 per ounce to the upside , on speculations that rising US interest rates can affect negatively the gold prices. Furthermore, if the interest rates rise, consequently the yields on bonds and cash in the form of money-market funds will also rise, which will make bonds and cash more attractive to investors than gold.
On the other hand, the strong U.S. economic data will limit the Gold gains, for example: today the market has witnessed the release of the US GDP data, which rose more than forecasted to 4.2%, while the Initial jobless claims declined to 298K.
These data have decreased the demand for yellow metal, while pushed the dollar index high.
Moreover, the expectations of more stimulus measures from the European Central Bank has weight on the yellow metal, and by contrast it boosted the demand the U.S. dollar and equities.
As a result, the demand for the Gold is always based on the economic data as well as the geopolitical tensions around the world, which can determine the future market movements.
Posted by MBCFX