Why Did Gold Suddenly Take the Brakes?
Gold prices are poised to end a nine-week rally after a sharp correction dampened the heat of the rally. Spot prices are holding above $4,140/oz and are headed for a weekly decline of around 3%, the largest since May, after briefly hitting a record near $4,382 early last week.
The main trigger: the market is reassessing the overextended rally and profit-taking. Hopes of improved US-China relations ahead of the Trump-Xi meeting next week are also reducing the need for hedge assets. Outflows from gold-backed ETFs surged, marking the largest daily outflow in five months.
Fundamentally, gold is still supported by central bank buying, concerns about currency debasement, and expectations of two Fed rate cuts before the end of the year, which could put downward pressure on yields. However, if US-China relations improve and ETF outflows continue, the buying impulse as a safe-haven asset could diminish in the short term.
The next market focus is Friday's US CPI release, which will provide an initial glimpse into economic conditions following the government shutdown. In other metals, silver weakened more than 5% a week after a record above $54/oz, platinum showed supply tightness in London with a premium of more than $70/oz over the New York contract, while palladium edged higher and the dollar index remained flat. (asd)
Source: Newsmaker.id
