Gold maintains its gains amid a decline in risk appetite and holds steady near $2900
March 11, 2025 (Investorideas.com Newswire) Investorideas.com, rated as a top 100 investment website for investing ideas, issues market commentary from Rania Gule, Senior Market Analyst at XS.com - MENA
Gold is currently experiencing notable fluctuations, hovering around the $2900 mark, influenced by several economic and geopolitical factors impacting the gold market. From my perspective, the upcoming summit between the United States and Ukraine will be a key determinant for the precious metal's direction shortly, as gold benefits from the weakening US dollar and falling Treasury bond yields, solidifying its position as a safe-haven asset amidst unstable economic conditions. Although gold previously tested the 21-day simple moving average at $2909, reflecting notable bullish momentum, profit-taking ahead of US inflation data temporarily limited the gains.
Over time, in my view, concerns over global trade wars and geopolitical risks remain at the forefront of factors supporting gold's rise. Markets are on edge due to President Donald Trump's trade policies, which contribute to heightened economic uncertainty. Additionally, worries about a potential recession in the United States are drawing investors' attention, driving demand for gold as a safe investment to protect capital from market volatility. At the same time, traders continue to monitor developments in US trade and economic conditions, as any signals of economic slowdown due to tariffs could prompt the Federal Reserve to cut interest rates, weakening the dollar and further enhancing the appeal of non-yielding gold.
I believe that while gold continues to benefit from the weakening US dollar, markets are also awaiting the release of US job vacancy data, which could provide new signals regarding the Federal Reserve's monetary policy stance. Any surprises in these data could significantly affect the dollar's movement, which may have positive or negative implications for gold prices. On the other hand, markets are also awaiting the results of the US-Ukrainian summit, which could play a decisive role in shaping gold's trajectory. If agreements are reached that help ease geopolitical tensions, gold prices may temporarily retreat, but continued disputes or escalated trade sanctions would revive demand for gold as a safe-haven, supporting its ongoing bullish trend.
In my opinion, gold continues to capitalize on the current market environment, where uncertainty surrounds US trade policy, exacerbating tensions between the US and its allies. After the tariffs recently imposed by the Trump administration on steel and aluminum imports, concerns about the impact of these policies on global economic growth have fueled demand for gold as a safe-haven asset. Moreover, the increased likelihood of an economic recession in the US has heightened investor concerns, prompting a shift toward gold to preserve wealth amid a weakened US dollar. The decline in US Treasury yields also provides additional support for gold, keeping the metal in a favorable position to benefit from these economic shifts.
However, despite the support gold enjoys at this stage, investor sentiment remains cautious due to the unclear short-term direction of the US economy. Markets are wary as US inflation figures loom, with the upcoming data being pivotal in determining the Federal Reserve's future moves. If these data show a decline in inflation, gold may struggle to maintain its gains, especially if the Federal Reserve revises its plans to reduce interest rates, strengthening the dollar and diminishing gold's appeal. Thus, investors remain alert to any signals from US economic data, especially with some economic circles hoping that the Federal Reserve may take steps to ease monetary policy should economic risks intensify.
I believe that geopolitical tensions, particularly those involving the US and Ukraine, will remain a key driver influencing gold prices. After the collapse of talks between the US and Ukrainian presidents in February, markets appear anxious about the current situation. Any escalation in the conflict or negative developments in negotiations could reignite gold buying as a hedge against risks. Furthermore, ongoing disagreements or the escalation of US economic sanctions could support the continuation of the bullish trend in gold prices, as such tensions often lead to increased demand for safe assets.
In my view, gold remains relatively strong at the moment, benefiting from a weaker US dollar and geopolitical concerns. However, it remains vulnerable to fluctuations tied to any surprises in US economic data, particularly regarding inflation and interest rates. Investors should proceed with caution and monitor developments closely, as any shifts in trade policies or monetary policy could drive gold either higher or lower, but the yellow metal is likely to maintain its allure as a safe-haven asset amidst the current global economic turmoil
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