BY: ONOME AMUGE
Gold’s glittering form as a safe-haven asset lost its bullish spark as the precious metal’s value declined in response to new peace talks between Russian and Ukrainian delegates, held in Istanbul, Turkey.
As a result, April gold futures lost over two percent for the day, to stand at $1,895 an ounce.
According to reports, Ukraine has proposed adopting a neutral status in exchange for security guarantees, Russia stated that it will “dramatically” reduce its military operations near Kyiv and Chernihiv.
Considering the latest peace talks, analysts have warned gold traders and investors to trade cautiously, noting that the precious metal is likely to trade lower in the near term.
Lukman Otunuga, senior research analyst at FXTM, said the latest development is a rough week for gold, adding that the current environment could drop gold prices to the next support level at $1,875 an ounce.
“An appreciating dollar and rising Treasury yields are likely to rub salt into the wound, sending the precious metal on a slippery decline,” he added.
Justin McQueen, market strategist at DailyFX.com, warned that if support at $1,880 doesn’t hold, prices could drop as low as $1,830 an ounce.
Despite the day’s disappointing trade, some analysts are still optimistic that the yellow metal could return to bullish trading, noting that gold will continue to play a significant role as a “portfolio diversifier” as inflation pressures persist globally.
Daniel Briesemann, precious metals analyst at Commerzbank, opines that gold’s rally is not over yet, especially if Russia and Ukraine fail to agree to a cease-fire.
Bill Baruch, president of Blue Line Futures, despite positing neutrality on gold in the near-term as peace talks take the shine off gold’s positive momentum, opined that gold’s long-term outlook remains bullish.
Explaining his stance, Baruch said gold is likely to be bullish in the long term due to the broader landscape of slower growth, Fed tightening, and inflation. He added that the Russia-Ukraine crisis was merely a near-term supportive factor, pulling forward some gains.
Baruch advised traders to stay cautious as they navigate not only today’s news flow, but the economic data as the week unfolds.