Gold prices experienced a notable decline on Monday, influenced by low trading volumes as both U.S. and Chinese markets remained closed for public holidays. The market sentiment shifted as some traders opted to lock in profits following a significant 2.5% increase in prices from the previous session. By 0359 GMT, spot gold decreased by 1.1%, settling at $4,988.04 per ounce, while U.S. gold futures for April delivery recorded a 0.8% loss, down to $5,006.60 per ounce.
Tim Waterer, the chief analyst at KCM, commented on the market fluctuations, noting, “Gold has given back some of Friday’s post-CPI gains today due to thinner trading conditions and a lack of fresh upside catalysts.” The specific context of this downturn included significant national holidays, with U.S. markets observing Presidents’ Day and China celebrating the Lunar New Year.
The latest data from the Labor Department’s Bureau of Labor Statistics indicated that the Consumer Price Index (CPI) rose by 0.2% in January, following an unrevised increase of 0.3% in December. This figure was lower than the 0.3% rise that economists surveyed by Reuters had projected.
Adding to market discussions, Austan Goolsbee, President of the Federal Reserve Bank of Chicago, remarked that while there is potential for interest rates to decrease, services inflation remains persistent. Market observers generally anticipate that the central bank will maintain its current interest rates at its upcoming meeting on March 18, but they are also factoring in the possibility of 75 basis points in rate cuts throughout the year, with the first expected in July.
In a low-interest-rate environment, non-yielding bullion like gold typically performs better. Waterer pointed out that for gold to aim toward $6,000 before the end of the year, “It will likely require the dollar to resume its downtrend.”
On the geopolitical front, tensions escalated as U.S. military officials prepared for potential weeks-long operations against Iran, contingent upon authorization from President Donald Trump. This situation raises the prospect of a more significant military conflict, marking a pivotal moment in U.S.-Iran relations.
The decline in gold prices mirrored movements in other precious metals, with spot silver dropping as much as 3.2% to $74.50 per ounce after a solid 3% increase on Friday. Spot platinum fell by 0.4%, reaching $2,054.78 per ounce, while palladium saw a marginal decline of 0.2%, landing at $1,682.44 per ounce.
