Major Banks Remain Bullish, Gold Attempts to Rebound
Gold prices rebounded and broke through $4,900 per ounce on Wednesday, driven by dip-buying after two consecutive days of declines. Market participants are now awaiting the release of the Fed's minutes from its latest policy meeting for clues on the direction of US interest rates.
Amid thin trading due to many Asian markets being closed for the Lunar New Year, gold briefly rose as much as 0.9%. Previously, the precious metal had fallen more than 3% in the last two sessions, as the US dollar strengthened. The main dollar index briefly rose as much as 0.4% on Tuesday before paring some of its gains.
Gold volatility remains high since the major sell-off at the beginning of the month. A strong rally took gold to a record high above $5,595 per ounce in late January, but a surge in speculative activity overheated the market and caused a sharp price reversal, dropping to nearly $4,400 in just two sessions. However, gold has since pared nearly half of that decline, though its movements remain volatile.
Several major banks, including BNP Paribas, Deutsche Bank, and Goldman Sachs, project the upward trend has the potential to continue. They believe the factors driving the previous rally remain intact, such as rising geopolitical tensions, a shift in interest away from bonds and certain currencies, and concerns about the Federal Reserve's independence.
In the short term, investors are monitoring comments from Fed officials and the release of minutes on Wednesday, which summarized the January meeting, when policymakers opted to hold interest rates. Expectations of a rate cut are typically a positive sentiment for non-yielding precious metals; gold briefly rallied on Friday after moderate inflation data strengthened the case for lower borrowing costs.
In comments, 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, while Chicago Fed President Austan Goolsbee sees the possibility of further rate cuts this year if inflation remains on that path. At 11:30 a.m. in Singapore, spot gold rose 0.9% to $4,919.63, silver rose 1.2% to $74.40, platinum rose 1.8%, and palladium gained 1.6%, while the Bloomberg Dollar Spot Index rose 0.1%. (asd)
Source: Newsmaker.id
