Gold Stuck at, Dollar Acts as Brake
Gold prices held steady on Thursday after surging around 2% on Wednesday, amid thin Asian trading conditions as most markets were closed for the Lunar New Year holiday. Market participants' attention now shifts to the Federal Reserve's (Fed) next move on interest rates.
Gold bullion traded around $4,970 per ounce, after dip-buying was active in the previous session following two consecutive days of declines. Price movements have also remained choppy since the major shock at the beginning of the month, which pulled gold down from a record high above $5,595.
Market sentiment was also influenced by the minutes of the Fed's meeting (January 27-28), which showed central bank officials appeared more cautious about cutting interest rates anytime soon. This dynamic has the potential to raise policy tensions, given that Donald Trump has frequently pushed for lower borrowing costs—which is usually a positive factor for gold because it does not yield interest.
Meanwhile, the US dollar held firm after economic data confirmed resilient activity in the United States. Industrial production rose by the most in nearly a year, and core capital goods orders increased more than expected, causing the Bloomberg Dollar Index to strengthen by around 0.5% on Wednesday and maintain that gain early Thursday.
Although the dollar tends to be a short-term drag, several global banks believe gold still has the potential to continue its upward trend. They highlight the remaining strong medium-term supporting factors, such as concerns about the Fed's independence, investors' diversification trend away from currencies/bonds, and rising geopolitical tensions that have increased the appeal of safe-haven assets.
The market is also monitoring developments in the Middle East, where US-Iran nuclear talks have so far failed to produce a breakthrough. Following negotiations in Geneva, US officials said Iran would return with a detailed proposal within two weeks, while US media reports suggested a potential military operation—if it occurs—could last for several weeks. In recent trading, spot gold edged down 0.1% to around $4,971, while silver edged up, platinum weakened slightly, and palladium strengthened. (asd)
Source: Newsmaker.id
