Gold price remains range-bound, its upward momentum restricted by rising treasury yields and profit-taking. The precious metal has pulled back significantly from record highs above the $2950 an ounce level at the back of massive profit-taking.
Amid the deep pullback, gold’s long-term outlook remains bullish. As concerns about new trade tensions resurface, the outlook for gold prices points to possible movement towards new record highs. The prospects of lower interest and soaring geopolitical and economic tensions are some of the factors that should fuel higher gold prices.
Gold Catalysts
Yields on US Treasury bonds have maintained a downward trajectory, bolstered by a successful auction of two-year government securities. Moreover, the latest release of US S&P Global business PMI statistics has raised concerns regarding the economy’s stability, heightening the probability of two interest rate reductions by the Federal Reserve this year. The dovish outlook regarding the Fed’s upcoming decisions has exerted downward pressure on US Treasury yields, indirectly fostering an environment for rising gold prices as they continue their upward trend.
The ongoing threat of a trade conflict is enhancing gold’s attractiveness as a conventional safe haven. Trump’s confirmation of broad tariffs on imports from Canada and Mexico has fuelled economic uncertainty, triggering demand for a haven. In addition, reports suggest that the Trump administration is contemplating stricter chip regulations concerning China, with possible limitations on Nvidia chip exports to the nation.
The precious metal markets are in turmoil as a result of President Trump’s proposed tariffs on Europe. Prices for gold have risen to previously unheard-of heights, and a notable discrepancy in the yellow metal’s worth between its two primary trading hubs, New York and London, has surfaced.
The surge in gold prices illustrates how Trump’s efforts to alter global trade practices are significantly impacting international markets. He recently described Europe’s trade position with the U.S. as outrageous and vowed to impose severe tariffs on the region. Although it remains uncertain whether any tariffs would directly influence gold, the gap in prices increased after Trump announced sweeping tariffs on aluminium and steel earlier this week.
Additionally, the lack of meaningful advancement in the second round of US-Russia discussions regarding the Ukraine situation further supports gold valuations. In the short term, gold prices are likely to be swayed by Trump’s tariff negotiations, while mid-tier US Consumer Confidence data may assume a secondary importance.
South Korea Gold Shortage
Meanwhile, South Korea’s government-operated mint is facing a shortage of gold bars due to heightened demand for the valuable metal. The Korea Minting and Security Printing Corporation (KOMSCO), tasked with producing and distributing various security items, halted gold bar sales last month.
KOMSCO explained that the suspension was due to difficulties in obtaining the necessary raw materials. This mint usually provides bullion bars to commercial banks, retail stores, and online marketplaces in Korea. According to local news reports, vending machines have run out of tiny gold bars as buyers rushed to acquire this safe-haven asset.
The unexpected surge in gold demand within South Korea has prompted local banks to temporarily stop gold bar sales at KOMSCO’s request, as there are insufficient bars available to meet the domestic demand.
