Could optimism on Ukraine undermine gold?

I think there is a good case for gold to correct itself in the not-too-distant future, but a confirmed reversal stick needs to be formed for me to turn bearish on XAU in short-term outlook.

With Trump declaring that he will end the wars in the Gaza and Ukraine, one could argue that haven demand is going to drop back if he achieves those goals. What’s more, his protectionist and spending policies could keep US inflation elevated, pushing back rate cut expectations and supporting bond yields. Today’s hot PPI figures certainly point that way.

But for now, strong bullish momentum prevails, and traders are largely ignoring these considerations.

For now, dips continue to be bought in gold, as they have done so for a long time now. It is a mix of factors – ongoing geopolitical uncertainties, inflation concerns, central bank easing, and steady demand from central banks and retail investors – all combining to maintain the bullish trend.

Let’s see if in the coming days that trend changes.

By Fawad Razaqzada, market analyst with FOREX.com