With Records Already Broken, Is Gold's Rally Running Out of Steam?
Gold prices are on track for a small weekly decline of around 0.5%, after mixed US employment data failed to provide any new impetus for the Federal Reserve to cut interest rates soon. In Friday morning trading in Asia, gold was trading in the range of $4,060–$4,080 per troy ounce, after a slight decline in the previous session.
The final employment report before the Fed's December 9–10 meeting showed a higher-than-expected number of new jobs in September, but the unemployment rate also rose. This situation has divided market participants: both the "hawks" and "dovish" camps can find their reasons. The minutes of the October FOMC meeting also indicated that many Fed officials are leaning towards holding interest rates, and the derivatives market is now pricing in only a 40% chance of a rate cut next month. This high-interest-rate environment is usually unfriendly to gold.
Despite a correction from last month's record high, gold has still recorded a gain of around 55% this year and has the potential to post its best annual performance since 1979. This rally was supported by inflows into gold-backed mutual funds (ETFs) and central bank purchases. However, some analysts believe the recent rally has gone too far and is largely driven by the "debasement trade," which is concerns about the debt and currencies of developed countries. Therefore, a correction and consolidation phase are considered normal.
Ahead of the next Fed meeting, gold tends to move within a narrow range while awaiting clearer signals regarding the direction of interest rates. The Dollar Index moved relatively flat, while silver weakened and other metals such as platinum and palladium actually strengthened slightly, reflecting investor caution amid monetary policy uncertainty. (asd)
Source: Newsmaker.id
