High Volatility Remains Unabated, Gold Seeks New Direction
Gold prices moved relatively stable after two consecutive days of declines, amid thin trading activity due to many Asian markets being closed for the Lunar New Year holiday. Low liquidity conditions make price movements more volatile, even without major catalysts.
At the start of trading, gold bullion was trading around $4,880 per ounce, after falling more than 3% in the previous two sessions when the US dollar strengthened. Trading has also remained volatile since the major sell-off at the beginning of the month. The main dollar index rose as much as 0.4% on Tuesday before paring its gains.
Previously, a strong rally had brought gold to a new record above $5,595 per ounce in late January. However, the market was deemed overheated and reversed sharply, with prices dropping to nearly $4,400 in just two sessions. Gold has recovered some ground, but has yet to find a clear support level. Several major banks, including BNP Paribas SA, Deutsche Bank AG, and Goldman Sachs Group Inc., predict the upward trend has the potential to continue. Supporting factors cited as remaining strong include rising geopolitical tensions, a shift in interest away from bonds and certain currencies, and concerns about the Federal Reserve's independence.
In the near term, investors' attention will be focused on statements from Fed officials to gauge the direction of US monetary policy. Expectations of interest rate cuts typically provide positive sentiment for non-yielding precious metals. Gold briefly strengthened on Friday when moderate inflation data reinforced the case for lower borrowing costs.
In terms of policy commentary, Fed Governor Michael Barr stated that interest rates should remain stable "for some time" until there is stronger evidence that inflation is moving toward the 2% target. Meanwhile, Chicago Fed President Austan Goolsbee believes there is still room for a rate cut this year if inflation continues to decline. At 8:51 a.m. in Singapore, spot gold was barely changed at $4,880.18, silver fell 1% to $72.83, platinum rose 0.9%, and palladium gained 0.5%. The Bloomberg Dollar Spot Index was flat on Wednesday and up 0.2% for the week. (asd)
Source: Newsmaker.id
