Is Gold's Falling a Real Reversal, or Just a Shakeout?
Gold (XAU/USD) corrected sharply on Tuesday after briefly touching $5,250, its highest level this month. This selling pressure halted a four-day rally, although the short-term uptrend hasn't necessarily ended.
The initial trigger came from a combination of a moderate strengthening US dollar and signs of stability in the stock market. As risk appetite improved slightly, interest in safe-haven assets waned, causing gold to lose momentum.
On the dollar side, the USD received a boost as the market read the Fed's outlook as still hawkish. The minutes of the January FOMC meeting showed that several officials considered additional easing inappropriate until there was evidence that disinflation was back on track.
Comments from Fed Governor Christopher Waller also contributed to shaping expectations. He left open the possibility of holding interest rates in March if February's employment data showed the US job market returning to "more solidity" after a period of weakness.
At the same time, gold's position hasn't lost all its cushion. The market is still pricing in the chance of an interest rate cut this year (rate cut bets), which theoretically supports gold because it is a non-yielding asset.
Furthermore, the economic impact of Trump's tariff policies could restrain further USD strengthening. If market concerns about slowing growth or inflation becoming "stubborn" again, volatility could return and gold could find support.
Geopolitical factors have also not disappeared. Concerns about conflict in the Middle East ahead of the third round of US-Iran talks have the potential to restrain gold's decline, so market participants are likely to wait for confirmation of follow-up selling before concluding that the uptrend is truly over.
5 Key Points:
- Gold fell from a monthly peak of $5,250 and ended a four-day rally.
- A stronger USD and more stable stocks dampened safe-haven interest.
- FOMC minutes and a hawkish tone limited gold's upside.
- Waller: March decision hinges on February employment data.
- Rate cut bets, tariffs, and geopolitics could limit gold's decline. (asd)
Source: Newsmaker.id
