Gold Stuck: Correction First or Ready to Accelerate Again?
Gold prices briefly rose to their highest level this week on Thursday, but failed to sustain their gains and slipped slightly again. Despite this, XAU/USD managed to hold above the $4,200 area heading into the European session. The main pressure came from a slight strengthening of the US dollar, which rebounded from its lowest level since late October following the release of the FOMC decision, coupled with market sentiment tending to be optimistic towards riskier assets such as stocks.
The dollar, which had fallen following the Fed's decision, has now begun to rebound slowly, reducing the appeal of gold priced in USD. When the dollar strengthens, gold prices tend to come under technical pressure because they become more expensive for foreign buyers. Furthermore, the current "risk-on" market climate has made some market participants more comfortable investing in stocks and riskier assets, rather than adding to safe havens like gold.
However, from a fundamental perspective, gold still has important support. The Fed's dovish stance—with interest rate cuts and signals of a no-aggressive interest rate hike—has the potential to restrain the dollar's strength in the medium term. Lower interest rates and expectations that the Fed will be less aggressive going forward are generally positive for gold, as the opportunity cost of holding a non-yielding asset like gold is lower.
Furthermore, ongoing geopolitical tensions, particularly related to the Russia-Ukraine war and other global risks, remain a strong reason for some investors to maintain gold as a hedge. These factors could limit selling pressure and keep gold's declines limited. Currently, gold's movement is more like a healthy consolidation phase above $4,200, while awaiting new triggers from US economic data and further statements from Fed officials. (asd)
Source: Newsmaker.id
