Gold prices dropped below $4,000 an ounce in Monday dealings, pressured in part by renewed optimism surrounding U.S.-China trade negotiations. That price level marks a “key threshold” that will define the near-term forecast for the precious metal, according to Fawad Razaqzada, market analyst at StoneX.
If prices hold below that level for more than a couple of weeks, that may mean that “a top has been formed for now,” he told MarketWatch. Under that scenario, “there could be further selling in the days and weeks ahead until prices look attractive for investors again, or we see increased risk aversion that calls for higher haven demand.”
Near term, gold’s forecast “hinges on risk sentiment, central-bank buying and the dollar’s trajectory,” Razaqzada said. “While optimism over trade talks has dulled gold’s appeal for now, the longer-term outlook remains underpinned by lingering geopolitical and inflationary risks,” ensuring the metal is far from out of favor.
