Gold Set for First Weekly Loss After Continuous Rise Since August

SadaNews Economy - Gold is on track to end a nine-week streak of gains, following a significant price correction in the market after reassessing the upward wave that drove the metal to a state of overbought conditions.

The price of gold reduced its losses today after the release of the inflation report in the United States, which came in better than expected. This bolstered market bets on further monetary easing from the U.S. Federal Reserve. Bond yields fell as traders anticipated a high probability of two interest rate cuts before the end of the year, a step that traditionally supports gold as a non-yielding asset.

Investors continue to monitor the prospects for improved relations between the United States and China, with U.S. President Donald Trump and Chinese President Xi Jinping preparing to meet next week in an attempt to ease the escalating trade war. Any agreement could reduce geopolitical tensions that have driven demand for safe-haven assets like gold.

The strong upward wave began in mid-August, pushing prices to a record high of $4,381.52 per ounce last Monday, before suddenly halting the next day as investors turned to profit-taking. The decline coincided with a significant outflow from gold-backed exchange-traded funds, which recorded the largest daily drop in assets in five months, according to data compiled by Bloomberg.

Saxo Capital Markets strategic analyst Charu Chanana stated, "It seems that the correction is starting to stabilize, but broad participation from individual investors indicates that volatility levels are likely to remain high," and "The next key resistance level is around $4,148, but a confirmed breakout above $4,236 will be necessary to confirm a return of upward momentum."

Gold's Upward Wave

Gold has risen about 57% since the beginning of the year, supported by central bank purchases and what is known as "currency debasement trade," as investors avoid government debt and currencies to protect themselves from exacerbating financial deficits. Also, expectations of accommodative monetary policy have enhanced the appeal of non-yielding gold.

Conversely, platinum surged by up to 2% before trimming its gains, as the London Metal Exchange shows signs of significant supply shortages, with prices rising to a premium of over $70 per ounce above New York contracts the day before yesterday. Lending rates also surged in movements similar to what occurred in the silver market following the liquidity crisis earlier this month.

Spot gold prices fell 0.4% to $4,108.27 per ounce at 9:56 AM New York time, while silver, which recorded a record level above $54 per ounce last week, is heading towards a weekly loss exceeding 6%. The Bloomberg Spot Dollar Index remained nearly stable, while platinum declined and palladium remained relatively unchanged.