NEW YORK (Scrap Register): Gold is on the defensive but the fight isn’t over, said Lukman Otunuga, research analyst at FXTM.
“With risk appetite coming back to the fore, gold bulls lost their iron grip last week…,” Otunuga said. “Gold’s recent performance indicates that markets are pricing in the increased likelihood of a U.S.-China trade deal happening sooner rather than later. With U.K. Prime Minister Theresa May also opening up the possibility of an extension to Article 50, investors are hopeful that the much-feared no-deal Brexit will be avoided, ultimately supporting risk appetite.”
Still, the end result of these issues is still uncertain. Concrete and positive resolutions may result in a surge in demand for riskier assets and conversely be negative for gold, Otunuga added.
It should also be kept in mind that gold bulls remain inspired by geopolitical risk factors and speculation over the Fed taking a break on monetary tightening this year, Otunuga noted.