International Gold Experiences Setback Amidst Rising USD and Equities
International gold prices have witnessed a downturn this week, primarily driven by a strengthening US dollar and a rally in global equity markets.
USD Strengthens, Weighing on Gold
The US dollar has been on an upswing in recent days, buoyed by expectations of continued interest rate hikes by the Federal Reserve. This has made gold, which is priced in dollars, more expensive for holders of other currencies. As a result, demand for the precious metal has waned, contributing to its price decline.
Equity Market Rally Undermines Safe-Haven Appeal
Global equity markets have also performed strongly this week, further denting gold’s safe-haven allure. Investors tend to flock to gold during periods of uncertainty and market volatility. However, with stock markets showing signs of recovery, the need for safe-haven assets has diminished, leading to a pullback in gold demand.
Technical Analysis Indicates Further Weakness
From a technical perspective, gold’s price chart suggests a continuation of the downtrend. The metal has broken below key support levels, indicating that sellers are in control. Additionally, moving averages are pointing downwards, confirming the bearish bias.
Gold Outlook Remains Cautious
Analysts maintain a cautious outlook for gold prices in the near term. The strength of the US dollar and the positive momentum in equity markets are likely to continue weighing on the metal. However, some analysts believe that gold could find support in the medium to long term, as economic uncertainties persist and inflation concerns remain elevated.
FXStreet View
FXStreet analysts expect gold prices to remain under pressure in the coming sessions. They cite the strong US dollar and the rally in equity markets as key factors behind the metal’s decline. However, they emphasize that gold’s long-term prospects remain intact, and the metal could stage a recovery once market conditions change.
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