Gold Pauses as Focus Shifts to Interest Rates
Gold held steady after surging around 2% on Wednesday, amid relatively quiet Asian trading due to most markets being closed for the Lunar New Year holiday. Market focus now turns to the Federal Reserve's (Fed) next move on interest rates.
Early in trading, the price of gold bullion hovered around $4,975 per ounce. Buying demand emerged in the previous session, after gold had fallen for two days, triggering a "buy the dip" movement from some traders.
However, gold's movement has remained choppy since the major turmoil at the beginning of the month. This shock pulled gold prices down from their record high of over $5,595 per ounce, making the market more sensitive to news and data.
The main highlight came from the minutes of the Fed's meeting (FOMC minutes), which showed several officials appeared more cautious about immediately cutting interest rates. This situation has the potential to create new political dynamics, as Donald Trump has frequently voiced support for lower interest rates—which is usually a positive for gold since it does not yield interest.
Meanwhile, the US dollar strengthened after economic data showed continued resilience. US industrial production rose by the most in nearly a year, and orders for "core capital goods" also rose stronger than expected, pushing the Bloomberg Dollar Index up about 0.5% on Wednesday.
Looking ahead, several major banks continue to see gold trending upwards, driven by the Fed's independence issue, a shift in investor interest away from currencies/bonds, and geopolitical tensions. The market is also closely monitoring developments in the Middle East, including the yet-to-be-promised US-Iran talks, which could again boost demand for safe-haven assets. (asd)
Source: Newsmaker.id
