Today, gold is recovering some ground after a slight decline on Monday amid USD dollar strengthening and eased trade concerns after the conclusion of an agreement between the US and Canada.
USD dollar remains an important factor of influence for gold, but gradually the yellow metal gets rid of global dependence on the American currency, regaining its status as the main defensive asset. This is a very positive moment for the precious metals market. Even today, gold and the dollar index show an atypical direct correlation, since the beginning of the day the dollar index has gained by 0.25%, while gold is also strengthening by more than 0.4%. These are all signals indicating a reorientation of investors from the dynamics of trading in the dollar towards geopolitical events.
The conclusion of a trade agreement between the United States and Canada has increased the investors' appetite for risks since many believe that other serious trade disputes between the US and China and Europe will soon be resolved. Yesterday, this factor played against gold and was the main reason for the formation of a downward movement, especially in the first half of the day. But today, investors once again intensified longs of precious metals after the statement of IMF head Kristin Lagarde about the problems that begin to contain the growth of the world economy. Besides investors analyses technical factors that indicate gold oversold conditions and undervalued precious metal. Next week, the official economic forecasts of the IMF will be presented, but according to Lagarde they have become less positive because many factors that previously were regarded as potential threats began to materialize.