Gold Prices Weaken, But Global Risks Could Provide New Support
Gold prices fell slightly below $4,100 per ounce in European trading Thursday morning, as investors took profits after significant gains in recent weeks. Optimism about easing trade tensions between the United States (US) and China prompted market participants to sell gold to lock in profits. At the same time, demand for the US dollar has risen again ahead of the release of important US inflation data scheduled for Friday.
Furthermore, the end of Diwali celebrations in India—the world's second-largest gold consumer—is also expected to dampen physical demand for the precious metal. Analysts believe this could be an additional reason for the short-term decline in gold prices. However, several global factors still have the potential to prevent further declines.
The political crisis resulting from the partial US government shutdown and escalating geopolitical tensions in several regions of the world could again boost demand for safe-haven assets like gold. Speculation about the possibility of further interest rate cuts by the Federal Reserve (The Fed) also provided additional support, as lower interest rates typically make gold more attractive compared to interest-bearing assets like bonds.
Looking ahead, market players will focus on the September US consumer inflation (CPI) data, due to be released on Friday. This data is highly anticipated amidst a lack of economic releases due to the US government shutdown. If inflation turns out to be higher than expected, the US dollar could strengthen further and put pressure on gold prices in the near term. However, if the results are weak, the opportunity for a rebound for gold could be wide open. (asd)
Source: Newsmaker.id
