Gold: Fragile rebound follows one-year low – ING

A 1.85% rebound in gold followed last week’s sharp sell-off, with lower oil prices and bargain hunting lending support, according to ING commodities strategists Warren Patterson and Ewa Manthey. Easing US-Iran tensions helped to allay inflation concerns as the metal recovered from a one-year low. However, the strategists warn that expectations of higher interest rates and a stronger dollar constrain the potential for a sustained recovery.

Rates and dollar constrain gold’s rebound

"Gold rebounded on Monday after last week’s sharp sell-off, helped by the pullback in oil prices and bargain hunting at lower levels."

"The precious metal settled 1.85% higher on the day, recovering from its lowest level in a year, after signs of easing US-Iran tensions sent crude sharply lower."

"The drop in oil eased some of the inflation concerns weighing on gold, providing additional support."

"The recovery follows a difficult period for gold. It's caught up in a broader risk-off move and heavy selling across technology stocks. Geopolitical risks remain elevated, while expectations for higher interest rates weigh on sentiment."

"We expect gold to regain some ground following its recent correction. But the near-term outlook remains challenging amid expectations for higher rates and a stronger dollar, limiting the scope for a more sustained recovery."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)