08 June 2018 ( Lagos) : Chills being felt even at 30 degreesThere seems to be a huge sense of anticipation mounting across financial markets ahead of the G7 summit which officially kicks off in Quebec today.

Global stocks weakened this afternoon as investors rushed to the sidelines in what could be a market-shaking “G6 plus one” showdown. With US President Donald Trump already sparking uncertainty by lashing out at Canada and France ahead of the meeting, optimism has diminished over any agreement being reached on trade during the two-day summit. Risk sentiment could take a hit if the talks between G7 leaders descend into disagreements and arguments. With escalating trade tensions seen as a major threat to global stability, the outcome of the summit could leave a mark on global sentiment.

Gold firms ahead of G7 meeting

Gold prices edged slightly higher as investors turned cautious ahead of today’s G7 summit. Price action suggests that the yellow metal needs a fresh catalyst for its next major move. If the G7 summit concludes in a deadlock with trade tensions heightened, the yellow metal could benefit as investors rush to safety. While risk aversion created from heightened trade concerns is positive for Gold, expectations over higher US interest rates are likely to threaten upside gains. With the Fed expected to announce another interest rate increase next week, zero-yielding Gold may face some headwinds down the road.

Regarding the technical picture, prices remain in limbo on the weekly charts with $1300 acting as a psychological level. A technical breakout above $1300 may inspire bulls to challenge $1324. Alternatively, if the $1300 level proves to be a stubborn resistance, prices could sink back towards $1280.

Source: Lukman Otunuga, Research Analyst at FXTM