Gold prices rebounded on Friday after a significant sell-off in the previous session, as investors bought the dip ahead of key inflation data from the United States. Bullion rose as much as 1.4 per cent, recovering from a 3.2 per cent drop on Thursday, its largest single-day fall in a week. The previous day’s decline coincided with market jitters on Wall Street amid concerns about the impact of artificial intelligence on corporate earnings. Some analysts suggested that margin calls and algorithmic trading may have amplified gold’s pullback.
The sell-off in US stocks extended to precious metals, with some investors reportedly selling commodities to cover margin calls, according to Liu Shiyao, an analyst at Zijin Tianfeng Futures. She noted that investors often hold multiple asset classes simultaneously, leading to redemption pressure when one asset faces a sell-off. However, she added that the overall impact on gold is not expected to be significant, as it remains in a consolidation phase. Michael Ball, a macro strategist at Bloomberg, suggested that commodity trading advisors using computer models to bet on price movements may have also intensified the pullback.
Market participants are closely watching the upcoming US inflation figures, which are expected to influence the Federal Reserve’s monetary policy decisions. Recent robust jobs data reduced the urgency for the Fed to cut interest rates by midyear. Lower interest rates generally support precious metals, which do not offer interest payments. On January 29, gold reached an all-time high above $US5595 an ounce, marking the peak of a multiyear rally that became overheated by speculative buying last month. In the subsequent two sessions, bullion prices fell by approximately 13 per cent.
As of 10.20am in Singapore, spot gold had climbed 1.1 per cent to $US4977.44 an ounce, while silver rose 1.9 per cent to $US76.70. Zijin Tianfeng Futures is a Chinese futures company providing brokerage, asset management and investment consulting services. The Federal Reserve is the central bank of the United States, tasked with ensuring the stability of the US monetary and financial system.
