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By Li Xing, Financial Markets Strategist Consultant to Exness
Gold retreated, slipping below the USD 4,500 mark as markets reacted to renewed volatility in energy prices and shifting expectations around monetary policy amid a backdrop of heightened geopolitical uncertainty. Changing monetary policy expectations amid higher crude oil and inflation fears continue to affect the metal. Expectations have shifted toward no interest cuts this year, while the more policy cautious outlook weighed on gold’s appeal.
However, geopolitical risk in Eastern Europe could help provide a floor to the market. At the same time, ongoing central bank purchases could also limit downside risk. Looking ahead, gold’s trajectory will hinge on the geopolitical developments in the Middle East. If diplomatic progress materializes, gold could stabilize and recover progressively. Conversely, renewed escalations or a more entrenched hawkish pivot in monetary policy would likely reinforce downside pressure, keeping bullion vulnerable to further declines in the near term.
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