Buy Gold Now or Wait for It to Drop Again?
Gold prices rebounded after falling below $4,000 per ounce on Monday. On Tuesday morning in Asia, spot gold prices returned to the $4,000–$4,100 per ounce range after plunging more than 3% the previous day. This rebound followed a major sell-off triggered by news that the US and China had reached a preliminary agreement on tariffs and export controls, which reduced demand for safe-haven assets like gold. At the same time, US Treasuries weakened, driving yields up, which put pressure on gold as it does not pay interest.
Despite falling from its high above $4,380 per ounce last week, gold prices are still up more than 50% since the start of the year. The reason: global central banks are still buying gold, and many investors are fleeing bonds and currencies for fear of growing government debt. But gold's rise from around $3,800 to above $4,300 in such a short period was considered too rapid, leading many to take profits. Therefore, some analysts recommend a more relaxed strategy: wait for gold prices to fall first, then buy when they start to rebound, rather than guessing the current bottom.
Downward pressure on gold was also a topic of discussion at the annual global gold industry conference (LBMA) in Kyoto. Professional market participants believe that central bank demand remains, but not as aggressive as at its peak, so a deep correction could actually be "healthy" for the market. In terms of outlook, Citigroup analysts believe the near-term trend remains bearish: they estimate gold prices could slip to around $3,800 per ounce in the next three months. This means that short-term sentiment is not yet fully bullish, although the longer-term narrative of inflation hedging and debt remains alive.
The next major factor is the Fed. The US central bank is expected to cut interest rates by another 25 basis points at the conclusion of its two-day meeting on Wednesday, which would be the second consecutive rate cut. The market is almost certain this will happen, and they will be listening for Fed Chairman Jerome Powell's tone: more dovishness = potential dollar weakness = new support for gold. Beyond that, there are medium-term monetary policy factors: the Trump administration has begun preparing a replacement for Jerome Powell, and the shortlist for the next Fed chair is said to include five names—Christopher Waller, Michelle Bowman, Kevin Warsh, Kevin Hassett, and Rick Rieder. Whoever is chosen will significantly influence the direction of interest rates, the US dollar, and consequently the price of gold going forward. (asd)
Source: Newsmaker.id
