Gold prices volatile on geopolitical concerns

Gold prices to $1,932 per ounce early on Monday but pared gains later in the day, dropping to the $1,922 per ounce level. If gold prices increase, resistance may be encountered near $1,968 per ounce, while if gold prices decline, support may be found near $1,909 per ounce.

Gold climbed early on Monday as geopolitical concerns surrounding Russia drew some investors into the haven metal. As the crisis has not escalated yet, however, geopolitical concerns eased during the day and gold pared its gains in late trading.

Gold prices have been predominantly directed by the dollar’s movement, as the competing gold typically loses appeal as an investment when the dollar rises. The dollar was flat on Monday and the dollar index fluctuated around the 102.7 level with low volatility. US Treasury yields increased on Monday, with the US 10-year bond yielding 3.73%.

The U.S. Federal Reserve kept its interest rate steady at its June policy meeting for the first time in over a year. Fed officials have voted to keep the central bank’s interest rate at a target range of 5.00% to 5.25%. The Fed has signaled that its tightening cycle is not over yet and that its peak rate might be higher than anticipated. Expectations of additional monetary tightening boost the dollar, driving gold prices down. Increases in central banks’ interest rates put pressure on gold prices since assets yielding interest become a more appealing investment compared to gold as interest rates rise. 

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Written by:
Myrsini Giannouli

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