Gold Back Above $4,900, Fed Minutes in Focus
Gold prices rebounded, rising above $4,900/oz after investors capitalized on the previous two days' decline to engage in dip-buying. The gains occurred amid thin trading conditions, as the Lunar New Year holiday rendered some Asian markets inactive.
On the New York futures market, gold futures rose 0.8% to $4,945.60 per troy ounce in early trading. This recovery indicates continued buying interest despite the price correction, although volatility remains potentially high due to lower liquidity.
According to Soojin Kim of MUFG, in the short term, the market remains heavily influenced by expectations of interest rate cuts. He believes lower borrowing costs will support non-yielding assets like gold.
In the longer term, several major banks still expect gold to strengthen again. They cite factors they believe remain persistent, such as geopolitical tensions, concerns about the independence of the Federal Reserve, and the push for investor diversification away from government bonds and certain currencies.
However, the direction of gold's movement remains dependent on subsequent data developments and monetary policy signals. Therefore, market participants tend to hold large positions while awaiting new clues regarding the path of US interest rates.
Investors are now awaiting the release of the FOMC Meeting Minutes to gain a clearer understanding of the direction of interest rate policy. These meeting minutes have the potential to be the next catalyst, as they could influence rate cut expectations—which have long been a key determinant of gold sentiment.
Source: Newsmaker
