Gold prices edged lower after a two-day rally, as investors capitalised on profits in a market struggling to establish a clear direction following a period of significant volatility. Silver also experienced a decline. Spot gold fell as much as 1.4 per cent, later paring losses to trade slightly above $US5000 an ounce. Market participants are awaiting upcoming US economic data this week for insights into the Federal Reserve’s future policy decisions. Although gold has decreased by about 10 per cent since reaching a record high on January 29, it remains significantly higher year-to-date.
According to Hebe Chen, an analyst at Vantage Markets in Melbourne, the current movement suggests “profit-taking and position trimming, rather than a renewed rush for the exit”. Chen noted that gold’s ability to hold above the $US5000-an-ounce level is crucial, describing it as a “psychological zone poised to serve as a key technical hurdle for sellers”. This comes even as buyers remain wary following recent volatility. Vantage Markets is a financial services firm that provides traders with access to the global markets. They offer tools to trade indices, forex, commodities, and shares.
Precious metals experienced a sharp decline at the end of January, triggered by a speculative trading surge that caused market overheating. However, the underlying factors that have supported a multiyear rally for gold – including heightened geopolitical risks, strong central-bank buying, and investors moving away from sovereign bonds and currencies – are still relevant. Several financial institutions, such as Deutsche Bank and Goldman Sachs, expect gold to recover due to these ongoing demand drivers. Highlighting continued official demand, the Chinese central bank has extended its gold purchasing streak to a 15th consecutive month in January.
Christopher Wong, a strategist at Oversea-Chinese Banking Corp, stated that “the flush-out was a much-needed reset for gold prices to resume their gradual trend higher.” Wong added that the structural factors supporting gold remain intact, downside momentum has eased, and gold is beginning to find firmer ground at lower, but still elevated, levels. In Singapore, spot gold was down 0.7 per cent to $US5024.74 an ounce at 11.47am, while silver dropped 2.4 per cent to $US81.43.
