Gold edged higher as investors assessed increasing geopolitical uncertainty and recessionary signals.
(Bloomberg) — Gold edged higher as investors assessed increasing geopolitical uncertainty and recessionary signals.
Bullion rose as much as 0.6% on Monday after Russian mercenary leader Yevgeny Prigozhin’s extraordinary mutiny. Still, the upside for the haven was limited after Prigozhin suddenly halted his dramatic advance toward Moscow over the weekend.
Bullion is more likely to be influenced by real rates and the dollar, and history suggests that rallies fueled by geopolitical risks tend to be short-lived.
“Gold seems to be trying to price a wide range of possible outcomes all at once, with downside from higher rates and upside from inflation/growth risks,” Morgan Stanley analysts led by Amy Sergeant said in an emailed note. “Although gold has been coming off from the highs, it still looks very strong relative to where yields are.”
Gold prices are still trading under the 100-day moving average, a key support level breached earlier this month as prospects for further monetary tightening by US and European central banks remained at the fore.
The “sluggish technicals” could see bullion sink to anywhere between $1,875 and $1,880, Citigroup Inc. strategists led by Aakash Doshi said in a note, adding that losses are unlikely to push gold below $1,800.
Money managers have been turning positive on gold again, increasing net-long positions by 1.4% in the week ending June 20 after bullish bets plunged nearly 20% in the previous session.
Spot gold rose 0.1% to $1,923.62 an ounce as of 10:06 a.m. in New York. Copper was 0.1% higher at $8,397.50 a ton on the London Metal Exchange.
–With assistance from Sybilla Gross.
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