Gold Strengthens, Awaiting ADP & ISM
Gold prices continued their rally, approaching $5,100 on Wednesday (February 4th) and briefly reached a weekly high in the European session. Spot gold was last trading around $5,082.94 per ounce (+2.9%), maintaining its rebound momentum after a major rally the previous day.
Safe-haven sentiment returned to the fore after US-Iran tensions escalated. Markets reacted to reports that the US shot down an Iranian drone approaching the US aircraft carrier USS Abraham Lincoln in the Arabian Sea—an event that immediately revived the geopolitical risk premium.
From a macro perspective, gold also benefited because the US dollar has not been able to recover strongly. Uncertainty about the direction of the Fed's policy (combined with the delay of some employment data) has made the market more cautious, allowing non-yielding assets like gold to continue strengthening as demand for hedging increases.
Looking back over the past few days, gold's movement has indeed been extreme. Prices briefly plunged to $4,403.24 on Monday, then rebounded aggressively—so gold is now up about $680 from that low and is starting to reapproach the psychological level of $5,100.
Next, the market awaits new triggers from tonight's US data: the ADP Employment Change and the ISM Services PMI. These two releases could shift interest rate expectations and change the direction of the dollar—ultimately determining whether gold can break through and sustain above $5,100 or return to volatility.
Source: Newsmaker.id
