Gold Holds Above $5,000, Market Awaits US Data
Gold prices (XAU/USD) maintained a positive bias for the third consecutive day on Friday (February 20th), holding above the psychological $5,000 level. However, the rise has not yet truly accelerated as the market assesses that the current fundamental drivers are still mixed.
Market participants tend to hold their positions and await two important data releases from the US: Advance Q4 GDP and the PCE Price Index. These two data points have the potential to be key triggers because they could change market expectations about when and by how much the Fed will cut interest rates.
From a geopolitical perspective, safe haven sentiment remains strong. US President Donald Trump warned that Iran must reach a nuclear deal within 10-15 days or face consequences. Iran responded that it does not seek war, but will not tolerate military aggression and stated that the attacker's bases/assets could be targets in the event of an attack.
These tensions increase the risk of military confrontation and broader conflict in the Middle East, thus maintaining market interest in gold as a safe haven asset. This factor has helped gold remain stable in the high area, even though market participants have not been fully aggressive in adding positions.
On the other hand, a factor holding gold back comes from US monetary policy. The minutes of the January FOMC meeting showed that the Fed was in no rush to cut interest rates, even discussing the possibility of a rate hike if inflation does not cool.
Furthermore, recent data indicates that the US labor market remains strong, coupled with hawkish comments from Fed officials. This combination has led to a reduction in expectations for an aggressive rate cut, pushing the US dollar to its highest level since January 23—and ultimately limiting gold's upside, requiring bulls to exercise extreme caution.
5 Key Points Underlying
Gold remains positive for the third day and holds above $5,000, but gains are limited.
The market is awaiting Advance Q4 GDP and PCE for new direction.
This US data will influence expectations for the Fed's rate cut path, which will impact the USD and gold.
US-Iran tensions maintain safe-haven demand, supporting gold.
The USD strengthened (reduced rate cut expectations + hawkish Fed signals), limiting gold's gains.
Source: Newsmaker.id
