Spot gold rebounded nearly 2% as a weak dollar and tensions between Russia and Ukraine boosted risk aversion

**Spot gold continued its upward trend, closing at $3,239.61 per ounce on Thursday, up nearly 2%, and hit a low of more than a month during the session. **At the same time, COMEX gold futures rose 1.66% to $3,241.10 per ounce; COMEX silver futures rose 1.19% to $32.775 per ounce.

Drivers

The weakening of the US dollar and the US economic data that fell short of expectations became the main driving force for the rebound in gold prices. The US dollar index fell 0.16% to close at 100.878, reflecting the overall weakness of the US dollar against six major currencies. The US producer price index (PPI) unexpectedly fell in April, the growth rate of retail sales slowed significantly, and the increase in the consumer price index (CPI) was lower than expected. These weak economic signals strengthened the market's expectations that the Federal Reserve will cut interest rates in September this year, increasing the attractiveness of gold as an interest-free asset.

In addition, geopolitical risks continue to support safe-haven buying. Russian President Vladimir Putin failed to attend the Russia-Ukraine peace talks in Turkey in person, but sent a secondary delegation to participate in the consultations, which weakened the market's confidence in the ceasefire agreement and prompted investors to increase their gold allocation.

Market View

Fawad Razaqzada, an analyst at City Index and FOREX.com, warned in his latest comments that gold prices may face downward risks in the short term, possibly falling to $3,000 per ounce. He pointed out that as global trade tensions eased, investors' risk appetite improved and gold market sentiment became cautious. Technical indicators show that gold has recently formed lower highs and lows, and the trend appears fragile. Razaqzada recommends paying attention to the two key support levels of $3,100 and $3,000, but at the same time believes that this round of adjustments may be a good buying opportunity in the medium and long term.

Suki Cooper, precious metals analyst at Standard Chartered Bank, warned that although the long-term bullish stance on gold is maintained, the rebound of the US dollar and the cooling of expectations for interest rate cuts may put pressure on gold prices. She pointed out that the US dollar has recovered some of its lost ground, and the market's expectations for interest rate cuts before the end of the year have been significantly reduced from 75.9 basis points last week to 49.1 basis points, and expectations for interest rate cuts in June have almost disappeared. The strong return of the US dollar has led to a reduction in gold holdings, and market concerns about inflation and economic slowdown have eased.

However, Cooper also stressed that there are still uncertainties in the global economy and multiple risk factors may continue to support gold prices. She suggested paying attention to exchange-traded fund (ETP) fund flows, official demand and market buying behavior as important indicators for judging gold trends.

Technical aspects and outlook

Gold prices have recently become more volatile, and investors should also pay attention to the support that the 30-year U.S. Treasury yield has risen to a new high of 4.9%. Technically, the key support levels are at $3,100 and $3,000. In the short term, gold prices may fluctuate in this range, and investors should pay close attention to changes in these prices.