Gold Prices Fall Under Pressure from Profit-Taking... Silver Nears $76 an Ounce

SadaNews - Gold has fallen below $5,000 an ounce as traders take profits from the previous session's gains, spurred by moderate U.S. inflation data.

The price of the precious metal fell by up to 1.1% on Monday, after rising by 2.4% in the previous session. The U.S. consumer price index rose by 0.2% in January, easing fears of a larger jump, and reinforcing the case for the Federal Reserve to lower interest rates. Precious metals, which do not yield returns, typically benefit from declining borrowing costs.

In China, markets are closed this week for the Lunar New Year holiday, which means liquidity will be weaker than usual during Asian trading.

Demand for precious metals in the country has been feverish in recent months, prompting authorities in the retail hub of Shenzhen to issue a stern warning against "illegal gold trading activities," ranging from applications providing loans to individual investors, to live broadcasts promoting the sale of bullion.

Weaker Liquidity and Technical Support

Hebi Chen, an analyst at "Vantage Markets" in Melbourne, said: "With China and parts of the broader Asian market on holiday, gold is likely to see weaker liquidity and a calmer tone in trading at the start of the week."

She added that the recent price movements reflect "organized consolidation and light profit-taking" after surging past the $5,000 mark following U.S. inflation figures released on Friday.

Gold jumped to a record level above $5,595 in late January with a wave of speculative buying that pushed the surge to a breaking point, before a sudden collapse at the beginning of the month led to a drop below $4,500. In volatile trading, the metal has regained about half of its losses since then.

Expectations for a New Uptrend

Several banks expect gold to resume its uptrend, considering that the factors supporting the rise remain in place, including geopolitical tensions, questions about the independence of the Federal Reserve, and a broader shift away from traditional assets such as currencies and sovereign bonds.

"ANZ Group Holdings Limited" stated that it expects bullion to reach $5,800 an ounce in the second quarter, joining a range of financial institutions predicting higher prices.

Chen noted that "structurally, the metal continues to show resilience, the macroeconomic backdrop has been strong but not disruptive, and technical support remains in place."

Spot gold was down by 1% to $4,985.75 an ounce as of 11:10 AM in Singapore. Silver dropped by 2.5% to $75.46 an ounce. Both platinum and palladium were trading slightly lower. The Bloomberg Spot Dollar Index, a measure of the U.S. currency, rose by 0.1%.

Silver Price

Silver prices were recorded near $76 an ounce.