Risk-On Pressures Gold, But Iran and Hormuz Provide Resistance
Gold plummeted in a quiet trading session on Monday (February 16th), dragged down by a combination of thin liquidity (the US was on Presidents' Day holiday, China was closed for Chinese New Year) and a strengthening dollar. At the latest update, XAU/USD was at $4,990.83 (-1.04%), having previously tested the upper area at $5,043.11 before losing steam.
Behind the weakness, market sentiment was actually still positive: expectations of a rate cut this year hadn't disappeared, but they weren't strong enough to make gold a target on thin volume. The brake: the DXY strengthened to around 97.07 (+0.16% in 24 hours), making gold more expensive for non-dollar buyers—and in a quiet market, the effect was even more pronounced.
On the bond side, US yields also fell sharply late last week—the 10-year Treasury yield fell to 4.05% on February 13—reflecting that the market still anticipates easing, although the timing is debated. Reuters noted that comments by Austan Goolsbee (Chicago Fed) remained cautious: rates could fall, but services inflation remains a concern—hence the market remains cautious ahead of a more "firm" signal.
Meanwhile, geopolitics remains a "truly trump card" that could at any time boost safe-haven demand: Iranian Foreign Minister Abbas Araghchi is already in Geneva ahead of the second round of nuclear talks, and the Iranian Revolutionary Guards are also conducting naval exercises in the Strait of Hormuz ahead of negotiations. This combination of headlines often acts as a "brake" when gold is about to fall further—especially this week as the market awaits the FOMC minutes (Wednesday) and subsequent US data to determine direction.
Source: Newsmaker.id
