gold rate prediction: Gold price prediction: Is gold heading for volatile trading in May?
Although gold has traditionally been seen as a hedge against inflation and uncertainty, its appeal diminishes when interest rates are high as rising yields make non-yielding assets less attractive.
Fawad Razaqzada, market analyst at City Index, said safe-haven demand remains even as gold’s impact weakens as it is increasingly seen as a risk-sensitive asset.
“Still, the need to hedge against inflation and persistent central bank purchases have helped limit deeper downside moves so far,” Razaqzada said. he said.
Meanwhile, the release of the U.S. employment report later this week will test whether the economy remains resilient enough to keep the Federal Reserve’s monetary policy steady or whether a softening labor market can stimulate the case for interest rate cuts.
“We’re seeing some bargain hunting following the recent sell-off, with easing oil prices also providing support. The market will continue to watch the headlines, but we may see the focus shift a little bit toward economic data,” said Jim Wyckoff, market analyst at the American Gold Exchange.
“Gold bulls need a significant fundamental spark to get back on their feet,” he added. The United Arab Emirates said it was under attack from Iranian missiles and drones; Washington even said a shaky ceasefire was intact, despite a truce the day before when US forces tried to force open the Strait of Hormuz.
The narrow waterway, which carries much of the global supply of oil, fertilizer and other commodities, has been virtually closed since the attacks began on February 28, causing prices to soar around the world.
Oil prices fell on Tuesday, but losses were limited. High energy prices risk increasing inflation and delaying central banks’ expansionary cycles.
