Gold Drops Below $5,000 to Hit New Record
Gold prices have fallen back below $5,000 per ounce, as the market appears to lack new catalysts to fuel a continued rally—following the historic plunge that rocked the weekend. This week's movement has been rather subdued: traders are waiting for the next major trigger, while others are opting to take profits after the extreme volatility.
Although now more than $1,000 below its January 29th high, gold is still up more than 10% year-to-date—indicating the major trend hasn't completely broken, but is simply entering a correction and position adjustment phase.
Dollar Strengthens, Gold Loses Steam
On Wednesday, gold fell as much as 1.2% to $4,888.19/oz as the US dollar strengthened. Earlier, it had surged as much as 2.9% and nearly touched $5,000/oz after dip buying resumed. Silver also pared its gains.
ING commodity strategist Ewa Manthey expects volatility to persist. According to him, the market is still "sorting out its position" and future movements will not be as linear as the past few weeks—meaning the ups and downs could be wilder and faster.
Geopolitics Remains a Buffer
In terms of sentiment, gold continues to receive a "buffer" from geopolitics. US-Iran tensions escalated after the US Navy shot down an Iranian drone. However, Trump emphasized that diplomatic channels are still working, so the safe-haven effect has not completely turned into panic buying.
"Needs a Catalyst" to Sustain Above $5,000
Bart Melek of TD Securities believes that for gold to consistently hold above $5,000, the market needs a clear catalyst. Without a new trigger, gold has the potential to move within a limited range in the coming weeks.
However, many investors and analysts believe that the fundamentals that drove gold to record highs are still in place. Fidelity Fund—which had reduced its gold position before the sharp decline—admitted it was monitoring for a buyback opportunity. (alg)
Source: Newsmaker.id
