[MARKET ANALYSIS] Spot gold retreats from Monday's best as USD strength weighs

Spot gold is experiencing a retreat from Monday's highs, largely influenced by the strengthening USD, placing it in a precarious trading range.

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[MARKET ANALYSIS] Spot gold retreats from Monday's best as USD strength weighs

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  • In the precious metals space, spot gold has eroded some of Monday's upside, hovering just below the USD 5,200/oz mark, with recent USD strength weighing. XAU and XAG trade in the lower ranges of USD 5135.135-5250.005/oz and 84.785-88.756/oz, respectively.
  • Elsewhere in the precious metal space, UBS reported that gold may surge to USD 6,200/oz in the near future, outlining that factors fuelling the recent rally remain intact. Primarily, ongoing geopolitical concerns between the US and Iran and equity/AI uncertainty.
  • Note, Shanghai Gold Exchange said it will cut its margin ratio and price limits for some gold and silver contracts as of the closing settlement on the 24th of February.
  • Copper prices have picked up, coinciding with its largest buyer, China, returning to the market after the holiday period. As such, the red metal trades above the USD 13k/t mark. That aside, there hasn’t been much newsflow regarding the red metal. Currently, 3M LME copper trades in the upper range of USD 13.005-13.061k/t.
Context

This movement suggests that if USD strength persists, gold may struggle to maintain upward momentum, despite bullish forecasts from firms like UBS regarding its future price amidst ongoing geopolitical tensions. Traders should watch for any shifts in forex dynamics that could further impact gold and silver, especially with recent changes in margin requirements from the Shanghai Gold Exchange.

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