The world of gold trading has recently showcased intriguing dynamics, particularly on February 21, a Friday that seemed poised to define trends in the precious metals marketDespite a slight dip in gold prices, the persistent demand for safe-haven assets fueled by investor concerns regarding new tariffs from the United States indicated a potentially bullish outlookObservers noted that this dip might not hinder gold from achieving a remarkable keenness for its eighth consecutive week of increases before reaching a plateau.
By the time the news hit the press, spot gold was down by 0.5%, fluctuating around the $2,923 mark, a far cry from its earlier zenith of $2,954.69 per ounce just the day beforeNotably, gold had already accrued an increase of over 1% throughout the week, setting itself on the verge of a significant achievement — the longest stretch of consecutive weekly gains since mid-2020. Julia Khandoshko, CEO of Mind Money Brokerage, provided insight into this pricing phenomenon: “Many have held onto the hope that gold would break past the psychological barrier of $3,000. However, the market’s slight correction shouldn’t be alarming. $3,000 is a critical thresholdShould gold breach this level, it is likely that previous resistance transforms into a solid support base for future price surges.”
Digging deeper into the nuances influencing these price fluctuations, it becomes evident that recent shifts in U.S. tariff policies play a significant roleEarly in the week, the U.S. indicated plans for an announcement regarding new tariffs expected to come as soon as the next monthThis includes not only the previously declared duties on imported cars, semiconductors, and pharmaceuticals but extends to timber and forest products, triggering ripples of concern across international marketsYeap Jun Rong, an analyst at IG Markets, commented, "Even amidst short-term corrections, gold has displayed remarkable resilience primarily due to the enduring uncertainty surrounding U.S. trade policies
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This ambiguity enhances gold's allure as a safe-haven asset, prompting investors to increasingly regard it as an avenue for wealth preservation." Investments in gold seen as a hedge have surged, buoyed by fears of retaliatory measures from other countries against U.S. tariffs, a conflict that potentially escalates inflation and shifts investor focus toward traditional safety nets.
Furthermore, discussions surrounding validating U.S. gold reserves have sparked widespread speculation, ultimately boosting expectations for gold price risesMarket players have maintained a keen eye on whether the U.S. would revise its gold reserves' valuation from the current $42 per ounce to reflect contemporary market pricesAlex Ebkarian, co-founder and COO of Allegiance Gold, expressed that a reassessment would not only elevate transparency within financial markets but also significantly influence gold prices. “If the government finally acknowledges the true market value of its gold holdings, it would undoubtedly result in a significant bullish impact in the gold market,” he disclosed in a Yahoo Finance interview.
From a broader macroeconomic policy perspective, Federal Reserve officials have indicated an awareness of rising inflation risksAdriana Kugler, a governor at the Fed, articulated that maintaining current rates might be prudent considering the prevailing balance of risksGold typically shines as a hedge against geopolitical risks and inflation, its value rising during economic turbulenceHowever, it’s essential to recognize that elevated rates can diminish the allure of gold as a non-yielding asset since high interest typically drives investors toward fixed-income securities.
Goldman Sachs analysts also weighed in earlier this week, adjusting forecasts for gold prices by the end of 2025, enhancing it to $3,100 from a previous expectation of $2,890. This revision is driven by a structural increase in demand from central banks, with China noted as the largest purchaser among them
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