According to Sean Lusk, co-director of commercial hedging at Walsh Trading, gold may face some headwinds in the near term before resuming its upward trajectory. While the longer-term outlook for gold remains bullish, Lusk points to seasonal factors, the strength in stocks, and the U.S. dollar as potential reasons for a possible retest of the $1900 level.
The seasonality of gold often sees weaker demand during the summer months, as investors tend to focus more on riskier assets like stocks. Additionally, the strength in the stock market and the U.S. dollar can act as competing factors to gold. Investors may choose to allocate their funds to stocks or other assets that are performing well, rather than hold onto gold.
Despite these short-term challenges, Lusk remains optimistic about the longer-term prospects for gold. Factors like inflation concerns, central bank policies, and geopolitical tensions are expected to support gold prices in the future. As a result, any near-term weakness in gold could potentially present buying opportunities for investors who are looking to position themselves for the longer term.
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