Short-term sell off pressure as gold tests the £1,588 ($2,000) level has created an opportunity to buy but that window is slamming shut with gold prices already starting to creep back up thanks to the emergence of a number of supportive factors.
One such factor is growing concern that China’s tough zero COVID stance, which has seen Shanghai in lockdown and fences placed around buildings to prevent people leaving their homes, could deal a devastating blow to already pressured supply chains. With the ports closed and hundreds of tankers waiting to dock in the critical port city, there is a real threat of global economic impact, leading equity markets around the world looking shaky.
The ongoing war in Ukraine is also proving new safe haven support for gold, with tensions ratcheting up on both sides of the conflict. With Russia claiming the UN is effectively at war and the White House upping calls to supply weapons to Ukraine as fast as possible, hopes of a resolution appear far off. This puts gold back to the forefront with risk-off sentiment dominating and safe-haven demand growing.