Profit-taking hits gold, global sentiment shifts to risk-on
Gold prices fell sharply on Friday, dragged down by profit-taking after rallying to a new record, while easing geopolitical tensions also eroded market interest in safe-haven assets. Spot gold fell 0.5% to US$4,592.29 per ounce at 1:39 p.m. ET, after touching US$4,536.49 earlier in the session. US gold futures for February delivery also closed down 0.6% at US$4,595.40.
Despite the daily decline, gold remains on track for its second consecutive weekly gain of around 1.9%, after hitting a historic high of US$4,642.72 on Wednesday. This selling pressure also aligns with a cooling in commodity markets after several weeks of aggressive rallies. The diminishing "geopolitical premium"—particularly as the situation in Iran appears to be calming and Washington is adopting a more cautious approach—has made the market less aggressive in seeking precious metals.
On the other hand, global sentiment was also influenced by trade dynamics after the US and Taiwan reached an agreement to cut tariffs on some Taiwanese semiconductor exports and open up new investment flows into US technology, a move that could potentially escalate tensions with China. From a monetary policy perspective, the market is also still reading the scenario of the Fed holding interest rates at least until the first half of this year, with the possibility of the first 25 bps cut approaching in June.
Analysts believe this correction is still reasonable amidst a major trend that has not yet been completely broken—gold typically remains valuable during times of high uncertainty and interest rates tend to fall, although its trajectory is often punctuated by sharp corrections.
In line with gold, silver was also dragged down: spot silver fell 2.9% to US$89.65 per ounce, but was still heading for a weekly gain of >12% after previously hitting a record US$93.57. Several banks assess silver as vulnerable to a deeper correction due to a combination of easing external US supply, ETF outflows, weakening industrial demand, and tightening trade regulations in China.
In other metals markets, platinum fell 3.3% to US$2,330.67 per ounce, while palladium weakened 0.6% to US$1,790.78 per ounce.
Source: Newsmaker.id
