Gold found renewed favour in the first trading session of June as investors sought refuge in safe-haven assets.
The price of gold is up by nearly 2% today, driven by a confluence of factors, notably the weakening US dollar. Several key geopolitical and economic developments are contributing to this surge:
- US-China Tensions: Both the United States and China are accusing each other of violating their recent trade agreement, a dispute that could lead to the re-imposition of substantial reciprocal tariffs.
- Escalation in Ukraine: Intensified attacks between Ukraine and Russia are diminishing prospects for peace negotiations. Representatives from both nations are currently meeting in Istanbul for a second round of talks.
- US Tariff Hikes: The United States is set to increase tariffs on steel and aluminum to 50%, effective June 4th.
Despite a relatively subdued performance in May, with only minimal gains, gold has made a strong comeback in the first session of June, reaffirming its status as a critical safe-haven asset. Goldman Sachs analysts maintain that gold will remain a core holding for investors, serving as a potential hedge against a possible second wave of inflation stemming from the ongoing trade war. Investors also anticipate gold to be among the top-performing assets during a "Sell America" play.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile app
Gold experienced minimal growth in May but has begun June with significant momentum. Historically, looking at 10-year seasonality, May and June have not typically been the strongest months for the precious metal. Source: Bloomberg Finance LP, XTB
This year, gold is not only the best-performing commodity but also stands out against equity markets, outperforming the record-breaking DAX and the S&P 500, which has returned to positive territory for the year after sharp sell-offs in February and March. Source: Bloomberg Finance LP
Chart Analysis
Gold is currently testing its highest levels since May 23rd, sitting just 2% shy of its highest closing price and 4% below its all-time intraday high. Notably, the strong uptrend remains intact, evidenced by a successful test of the 50-period moving average (green line). Furthermore, the 50.0 Fibonacci retracement level of the most recent downtrend and the 25-period moving average have both acted as support.
Source: xStation5
The material on this page does not constitute as financial advice and does not take into account your level of understanding, investment objectives, financial situation or any other particular needs.
All the information provided, including opinions, market research, mathematical results and technical analyses published on the website or transmitted to you by other means is provided for information purposes only and should in no event be interpreted as an offer of, or solicitation for, a transaction in any financial instrument, nor should the information provided be construed as advice of legal or fiscal nature.
Any investment decisions you make shall be based exclusively on your level of understanding, investment objectives, financial situation or any other particular needs. Any decision to act on information published on the website or transmitted to you by other means is entirely at your own risk. You are solely responsible for such decisions.
If you are in doubt or are not sure that you understand a particular product, instrument, service, or transaction, you should seek professional or legal advice before trading.
Investing in OTC Derivatives carries a high degree of risk, as they are leveraged based products and often small movements in the market could lead to much larger movements in the value of your investment and this could work against you or for you. Please ensure that you fully understand the risks involved, taking into account your investments objectives and level of experience, before trading, and if necessary, seek independent advice.
