Gold rallies as dollar weakens

By  Abdelhadi Laabi

Gold extended its upward trajectory as the asset climbed this week, supported by a weaker dollar and growing uncertainties surrounding the Federal Reserve’s interest rate outlook. However, gold continued to trade horizontally overall. The path forward for gold prices could remain uncertain as the asset could come under pressure with interest rates at high levels. 

Yesterday’s release of the minutes from the Federal Reserve’s policy meeting revealed a cautious stance among officials regarding the beginning of interest rate cuts, which could support the case for delaying their start. Expectations for interest rate cuts point toward a first cut in June while the Federal Reserve could leave rates unchanged at their next two meetings. Lower interest rates could support gold over the longer term.
 
In addition to monetary policy dynamics, geopolitical tensions in the Middle East could support the demand for gold as investors look for safe haven assets. The risks of a long-lasting conflict in the region and in Europe could support the market and could offset some of the concerns regarding high interest rates.