Gold Rebounds After Selloff, US CPI Leads
Gold rebounded on Friday (February 13th) after being hit by a sudden sell-off in the previous session, when market jitters prompted a dumping of assets across all classes. Buyers returned ahead of the release of US inflation (CPI) data, which is expected to alter market expectations regarding the Federal Reserve's next move.
Bullion briefly rose as much as 1.4% on Friday, after plunging 3.2% the previous day—its biggest daily decline in a week. The fall coincided with turmoil on Wall Street, as prices across various assets weakened due to renewed concerns about the impact of AI on corporate earnings. Gold's correction is also said to have deepened due to a combination of margin calls and algorithmic trading, which accelerated selling pressure.
According to Zijin Tianfeng Futures analysts, the decline in US stocks has also "contagious" to precious metals as some investors holding broad portfolios have been forced to sell commodities to cover margin requirements. In practice, when one side of a portfolio is sold heavily, other assets also face withdrawal pressure—although they believe the impact will not be permanent because gold is still in a consolidation phase.
Selling pressure is also suspected to be exacerbated by the actions of commodity trading advisers (CTAs) who use computer models to track price momentum. Furthermore, some of the weakening in gold and silver may have been triggered by profit-taking, given that precious metal volatility has increased sharply after the market experienced a major rout at the turn of the month. Despite its volatile movement, gold is expected to end the week relatively flat.
Market focus is now on US inflation data scheduled for release Friday evening. Strong January employment data this week has reduced the urgency of an imminent interest rate cut—even though lower interest rates are usually a welcome boost for non-yielding precious metals. Meanwhile, hedge fund manager David Einhorn said he expects the Fed to cut interest rates "more significantly" than the market expects, and believes Kevin Warsh—Donald Trump's pick to replace Jerome Powell—has the potential to drive borrowing costs lower.
Gold previously hit a record high above $5,595/oz on January 29, but after a rally deemed "overheated" by speculative buying, prices then fell around 13% in the following two sessions. Nevertheless, several major banks maintain their bullish outlook, arguing that key drivers—ranging from geopolitical risks, the Fed's independence issue, and the shift away from traditional assets—remain relevant. BNP Paribas sees gold heading towards $6,000 by year-end, while Deutsche Bank and Goldman Sachs also remain optimistic.
In Asian trading, spot gold rose 1.1% to $4,977.44/oz (10:20 a.m. in Singapore). Silver gained 1.9% to $76.70, platinum rose 1.4%, and palladium added 2.2%. The Bloomberg Dollar Spot Index edged up 0.1%.
Source: Newsmaker.id
