Early Signs of a Major Correction? Gold Slowly Declining!
Global gold prices (XAU/USD) fell slightly during the Asian session on Thursday, erasing some of the gains that had taken them to a nearly two-week high in the previous session. Risk-on market sentiment and hopes for a peace agreement between Russia and Ukraine prompted some market participants to take profits from the previous rally. This occurred amid relatively thin trading volume due to the Thanksgiving holiday in the United States.
The more optimistic market mood drove funds out of safe-haven assets like gold and toward riskier assets, resulting in natural short-term selling pressure. However, on the other hand, the fundamental factors supporting gold have not disappeared. Expectations that the US Federal Reserve will soon cut US interest rates again at its December meeting remain strong in market participants' minds.
A series of US economic data released this week was deemed mixed and insufficient to change the market's view on the prospect of an interest rate cut. This condition pushed the US dollar to its lowest level in more than a week, and weak yields provided support for gold, which does not pay coupons or interest. A depressed dollar typically makes gold more attractive to holders of other currencies.
The combination of a weak dollar, dovish Fed expectations, and maintained hedging interest has led the market to assess that gold's downside is likely limited. Corrections like the one in the Asian session are more often seen as natural profit-taking after a rapid rise, rather than a signal of a major trend reversal. As long as the interest rate cut narrative and global uncertainty persist, gold remains potentially attractive during times of price weakness. (asd)
Source: Newsmaker.id
