Analyst Boris Schlossberg warns that political uncertainty such as uncertainty with Iran could push gold prices higher.
“Gold has been going up and down in fits and starts. But, right now it is suffering the pullback because of the U.S. dollar strength,” Schlossberg, managing director of FX strategy at BK Asset Management, recently told CNBC.
Gold prices have fallen because of the stronger dollar and rising interests rates in the U.S., RT.com explained. “Gold really suffers when real rates start to rise because gold offers no carry whatsoever,” Schlossberg told CNBC.
Gold is poised to climb even higher because investors regard it as a safe haven in times of turbulence.
“If we had some sort of geopolitical risk, especially geopolitical risk with Iran, gold will always be a harbor of safety and will have a sharp spike higher,” he said.
President Donald Trump has threatened to retreat from the deal by not extending sanctions waivers when they expire on May 12, unless European signatories of the accord fix what he calls its “flaws.”
Germany and France on Monday vowed to stand by the 2015 nuclear deal between Iran and world powers even if the United States pulls out, with the German foreign minister saying the world would be less safe without it, Reuters explained.
France, Germany and Britain have for weeks been campaigning to keep the deal alive and have been negotiating since January with the U.S. to find ways to convince Trump to keep to the accord.
In an effort to keep Washington in the deal, the three EU states have been discussing how to tackle Iran’s ballistic missile program, its nuclear activities beyond 2025 - when key provisions of the deal expire - and its role in the wars in Syria and Yemen.
Iranian President Hassan Rouhani said on Monday the United States would regret any decision to leave the deal and Tehran would fiercely resist U.S. pressure to limit its influence in the Middle East.
Gold prices fell on Monday, snapping three days of gains as the dollar index rose back towards its 2018 peak and last week's soft U.S. jobs data did little to dampen optimism about the world's largest economy. That left traders betting the Federal Reserve would press on with lifting U.S. interest rates this year.
Higher rates typically weigh on gold, as they increase the opportunity cost of holding non-yielding assets such as bullion.
Spot gold was down 0.2 percent at $1,312.03 an ounce, while U.S. gold futures for June delivery were 0.2 percent lower at $1,312.70, Reuters explained.
The market was thinned by a national holiday in Britain, which closed trading desks in London.
(Newsmax wire services contributed to this report).
© 2022 Newsmax Finance. All rights reserved.