Gold Prices Begin Recovery
Last week was a rough one for gold prices as the market responded to a calmer political mood and reassurance from the U.S. Federal Reserve about the American economy. This week, however, has started strong for bullion after its weak performance.
The yellow metal came in at $1,227 an ounce after it had registered three straight weeks of decline. Since mid-April, gold has been on a downward plunge, hurt by the easing of political tensions across the globe, as well as a U.S. Fed signaling an interest rate hike coming in June.
It seems that the market over-corrected itself, however, and gold is having a bounce back this week, despite more bad news for the precious metal on the political front. Emmanuel Macron emerged victorious in the French federal election this weekend, beating out far-right Eurosceptic party National Front, and its controversial leader Marine Le Pen.
Macron was the preferred candidate by markets due to his mainstream ideology, his backing of free trade, and his reluctance to challenge the euro currency and the European Union (EU) more broadly.
The U.S. central bank also held a meeting last week and came out with a positive message concerning the U.S. economy, which has led analysts to project an interest rate hike in June. The U.S. dollar also rose on the back of the results of the French election.
Despite all this usually-bad news for gold value, the commodity was still able to register modest gains on Monday, going against the usual inverse relationship that gold shares with the U.S. dollar.
Gold prices will attempt to rally this week, despite most of the recent news going against what traditionally powers a rise in value. If political conflicts continue to ease up, the U.S. dollar furthers its rise, and more positive data is released concerning the American economy, gold prices might not see these gains continue for long.