Gold Approaches $4,300!
Gold prices weakened in the Asian session on Friday, falling below $4,350. This movement occurred despite signs of easing in US inflation (CPI), which should have supported gold through the possibility of an interest rate cut.
The main pressure came from profit-taking after the previous rally. Furthermore, there was liquidation of long positions by short-term futures traders, causing gold to lose momentum and move lower.
However, the potential for a decline in gold is considered modest. Lower-than-expected US CPI data for November could open the door for further Fed rate cuts, which is typically a positive sentiment for gold.
When interest rates fall, the opportunity cost of holding gold decreases because gold is non-yielding. This means gold tends to be more attractive when the market sees a downward trend in interest rates.
Beyond interest rates, geopolitical conditions can also be a contributing factor. US-Venezuela tensions, coupled with continued strong industrial and investment demand, have the potential to maintain interest in gold as a safe-haven asset.
However, the market is also closely monitoring the quality of inflation data, as the data collection process was impacted by the longest federal government shutdown in US history. The next focus is the release of the University of Michigan Consumer Sentiment Index for December, scheduled for Friday and could provide additional clues to market direction. (asd)
Source: Newsmaker.id
