Gold: Can the fragile recovery from a one-year low last? – ING

Gold’s 1.85% rebound from a one-year low was supported by lower Oil prices and bargain hunting following last week’s sharp sell-off, according to ING commodities strategists Warren Patterson and Ewa Manthey. Easing US-Iran tensions helped temper inflation concerns, although the strategists warn that expectations of higher interest rates and a stronger Dollar constrain the prospects for a sustained recovery.

Can the rebound last amid higher rate expectations and a stronger Dollar?

"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.)