Gold prices retreated in trading on Tuesday, after two consecutive days of gains, as investors moved to take profits, with market fluctuations continuing to search for a clear direction following a historic rally.
Gold prices fell by approximately 1.4% in today’s trading, before paring losses and moving back above $5,000 per ounce. Silver prices also declined, as the US dollar remained weak.
Despite gold prices falling by around 10% since reaching their all-time high on January 29, they remain notably elevated this year.
Awaiting Clarity on US Monetary Policy
This comes as traders await US data this week, looking for signals on the direction of monetary policy.
Regarding this, an analyst stated: “This move indicates profit-taking and position reduction, not a renewed rush to exit the market.”
They added: “More importantly, gold is maintaining its price above the $5,000 per ounce level despite the recent decline, a psychological zone that would pose a major technical hurdle for sellers, even as buyers remain cautious following recent volatility.”
Precious metals prices collapsed at the end of last January, after hitting historic record levels. However, the factors that drove prices higher in the first place—geopolitical tensions, central bank purchases, and investors’ desire to diversify their portfolios—remain in place.
Expectations for a New Gold Rally
At the same time, analysts expect gold to resume its rise with factors supporting long-term demand. Pointing to strong official demand, the central bank extended its gold purchasing program into a fifteenth month in January.
A strategist noted: “This decline represented a necessary reset for gold prices, to resume their gradual upward trend.”
They added: “The structural factors supporting gold remain in place. Downward momentum may have eased, and gold is beginning to find a firmer footing at lower levels, but its prices remain historically high.”
