Gold Retreats from 3-Week Peak
Gold prices corrected on Tuesday (February 24th), ending a four-day rally after briefly touching a three-week high. This decline occurred as market participants took profits, while the US dollar strengthened slightly amid renewed uncertainty over US tariff policy.
In afternoon trading, spot gold fell around 1.6% to $5,141.87/oz, while US gold futures weakened 1.3% to $5,159.06/oz. The correction occurred after gold strengthened aggressively the previous day, driven by a surge in safe-haven demand triggered by uncertainty over the direction of US trade policy.
The strengthening dollar was a major factor. The US dollar index strengthened around 0.3%, rebounding from the previous day's decline. A stronger dollar makes gold relatively more expensive for holders of other currencies, thus softening short-term demand.
Market focus has returned to the issue of tariffs. After the US Supreme Court overturned previously imposed large tariffs, the US government quickly announced new tariffs of up to 15%, rekindling concerns about an escalation in the trade dispute. Trump also warned that countries deemed to be "playing around" with trade agreements risk facing higher tariffs, reinforcing the perception that tariff policies could still change quickly.
On the geopolitical front, Middle East tensions remain a factor maintaining defensive demand. The US and Iran are scheduled to hold a third round of nuclear talks in Geneva on Thursday, while military tensions and regional tensions are considered high. This condition tends to keep gold sensitive to geopolitical headlines, despite the correction.
Meanwhile, silver moved in the opposite direction. Silver prices rose around 0.8% to $87.34/oz, extending the upward trend of the past few sessions. This divergence suggests investors remain selective, focusing on the dynamics of each metal and differing speculative flows.
Despite gold's weakness today, UBS reiterated its positive outlook on gold and projected prices could rise to $6,200/oz in the coming months. UBS assesses that the fundamental pillars of the rally remain strong: geopolitical uncertainty, which has the potential to trigger a surge in volatility, and the prospect of monetary policy easing—with expectations of a Fed interest rate cut that could put downward pressure on the dollar and real yields, thereby strengthening gold's appeal as a hedge.
Source: Newsmaker.id
