By Barani Krishnan
Investing.com - The chorus of “reopen” across the world is prompting investors to rediscover risk appetite lost to the Covid-19 pandemic. Higher oil and stock prices also means any upside in gold and other safe havens is capped for now.
U.S. gold futures for June settled down $2.70, or 0.2%, at $1,710.60 per ounce before resuming a touch higher in real-time trade as places from India to Thailand to Italy to the United States reopened in stages.
Spot gold, which tracks live trades in bullion, was up $5.66, or 0.3%, to $1,707.42 by 3:15 PM ET (19:15 GMT) as oil prices hit one-month highs and Wall Street’s Nasdaq continued its reach toward a positive year.
“After 25 days of inflows to gold ETFs, today’s pause is a wait-and-see on how reopen plans may work,” said George Gero, precious metals analyst at RBC Wealth Management in New York.
But Gero also said it wasn’t time to dump long positions in gold yet. Far from it, the deluge in stimulus spending across the world made the yellow metal a key inflationary bet and safety hedge, he said.
“Coming political and economic headlines should be supportive to gold as $1,800 becomes the next area of interest past this summer,” he added. “Look for steady gold prices with occasional dips to continue as traders focus on the Fed and central bank meetings.”
TD Securities concurred with that view.
“Discerning the forest from the trees, we argue that investment demand will continue to flow towards gold as capital seeks to shelter itself from negative real rates,” the Canadian bank-backed brokerage said, adding that its outlook called for “a strong breadth of positive technical signals in gold, which argues for further upside.”