Gold prices edge lower on Wednesday as the greenback is on the rise against major rivals on the back of month-end flows, supporting the US currency. The trade war fears persist, and risk-off mood still prevails in the global stock markets. However, as the yellow metal has lost its shine as a safe haven asset, it doesn’t get any boost from the current environment.
Spot gold is extending its bearish correction from mid-February highs just below the $1.357 mark and is already trading close to the $1.333 figure. A break below will open the way to $1.330, should the greenback continue its intraday ascent. As the USD’s bullish potential still looks limited, there is a low chance for extending the retreat to the $1.315 area for the time being.
In the longer term, considering high volatility in the stock markets, especially in Wall Street, gold may eventually regain its safe haven status, should the potential trade war start to pose a threat to the global economy. The medium term prospects will further depend on USD moves. So far, there no any significant signs of a reversal in the current bearish trend in the greenback.
By Helen Rush
Senior Analyst at Capital Markets