Deteriorating US economy to limit likely decline in gold prices — RBC

The gold market remains volatile due to new import tariffs imposed by US President Donald Trump. However, according to analysts at RBC Capital Markets, the risks of a significant drop in prices are limited.

Noting the potential for growth of the yellow metal, the bank's experts emphasize that the current level of its price looks overvalued. In particular, as RBC expects, gold prices may test the support level of $2821 per ounce.

At the moment, the precious metal prices are near $3050 per ounce. In order to reach new highs, gold will need a new stimulus from economic data. Investors now estimate the probability of a recession in the US at 47%. At the same time, consumers expect inflation to rise to 6.2% over the next 12 months.

For now, official data indicate the continued stability of the American economy and a relatively healthy labor market, Kitco News reports. However, if pessimistic forecasts are realized, the Federal Reserve may start cutting interest rates. This will support gold prices.