16.04.202111:45 Forex Analysis & Reviews: Geopolitical tensions could drive gold up, but the boost will be short-lived

Geopolitical tensions are escalating. On the bright side, this is positive for gold. However, Metals Focus said this alone could not sustain strong price increases.

They pointed out that the boost foreign policy issues provoke is always short-lived, as was observed in the previous years.

"Gold hit multi-year lows at the end of 2013. Then, it began to recover slightly, briefly surpassing $ 1,380 last March 2014. The crisis supported these gains, but they were short-lived as the positive macro statistics continued to weigh on gold," Metals Focus analysts said.

For example, during the missile crisis in North Korea last 2017, gold prices rose rapidly. But in the end, investors became more focused on the growth of the global economy.

Another example is the recent trade war between United States and China. It helped gold reach $ 1,500 an ounce.

Even the storming of the Capitol last January 6 drove gold prices up to all-time highs.

But now, gold dropped to record lows because Treasury yields and the US dollar rallied on rising expectations that the US economy will experience a stronger and more rapid recovery after the COVID-19 pandemic.

Metals Focus said this situation will remain the dominant factor affecting gold, but their projections are positive because they believe that interest rates will remain low even after the global economic recovery.