Gold Stucks below $5,000 as Strong Dollar Holds Back
Gold prices (XAU/USD) moved flat on Thursday (February 19th) and struggled to break through the psychological $5,000 level. The market is weighing two competing forces: the hawkish FOMC minutes on the one hand, and persistently high geopolitical tensions on the other.
In recent trading, gold was around $4,975 after briefly touching a daily peak near $5,021. Gains were restrained as the US dollar strengthened to near a near one-month high, adding modest pressure on the non-yielding precious metal.
The dollar's strength was fueled by a series of stronger-than-expected US data. Initial Jobless Claims fell to 206,000 (better than the 225,000 forecast), indicating a still-resilient labor market. Meanwhile, the Philadelphia Fed Manufacturing Index rose to 16.3 in February, beating expectations of 8.5 and up from 12.6 in January.
On the policy front, the Fed's meeting minutes showed that most officials were cautious about cutting interest rates and wanted to keep rates unchanged for some time while evaluating the data. Some even left open the option of a rate hike if inflation remains above target. While some noted that a rate cut could become relevant if inflation slows as expected, the general message remained that the chances of a rate cut were still off—supporting the dollar and yields, while weighing on gold.
Amid these pressures, geopolitical factors continued to provide a cushion for gold. US media reports indicated that the US military was preparing for possible action against Iran as early as the weekend, amid increased military assets in the Middle East. Market focus now turns to Friday's major data releases, particularly US Core PCE and advance GDP, which have the potential to determine whether gold has the strength to retest $5,000 or remains held back by a strong dollar.
Source: Newsmaker.id
