Fed Momentum in the Spotlight, Here's What Happened to Gold!
Global gold prices fell around 0.48% to US$4,107 per ounce in the Asian session on Wednesday, after hitting their highest level since October 23 in the previous session. This decline was triggered by a rebound in the US dollar and profit-taking after gold strengthened for nearly three weeks on expectations of an interest rate cut by the Federal Reserve (The Fed) next month.
The strengthening dollar makes gold priced in US currency relatively more expensive for investors from other countries, thus suppressing demand. Meanwhile, investors are also adjusting their positions after gold prices rose significantly in the previous session. According to Tim Waterer, Chief Market Analyst at KCM Trade, the previous dollar weakness supported gold and silver, but now "conditions are returning to normal" with gold moving back above US$4,100 per ounce.
From a fundamental perspective, expectations of a US interest rate cut remain supportive of gold. Traders estimate a 68% chance that the Fed will cut interest rates by 25 basis points next month, as inflation declines and unemployment rises. Gold, as a non-yielding asset, tends to be attractive in an environment of low interest rates and economic uncertainty. Furthermore, the SPDR Gold Trust reported an increase in its gold holdings to 1,046.36 tons on Tuesday, up from 1,042.06 tons the day before.
Meanwhile, other precious metals experienced slight corrections. Silver fell 0.4% to US$51.05 per ounce, platinum fell 0.4% to US$1,578.95, and palladium fell almost 1% to US$1,431.47. Analysts view the current decline in gold prices as more of a technical correction, so investors remain open to buying at this level, especially if further US economic data supports monetary policy easing. (asd)
Source: Newsmaker.id
