Gold prices experienced a downturn on Monday, primarily influenced by subdued trading activity as both US and Chinese markets remained closed in observance of local public holidays. Spot gold decreased by 1.1 per cent to $US4988.04 per ounce, while gold futures for April delivery fell 0.8 per cent to $US5006.60 per ounce.
According to KCM chief analyst Tim Waterer, the decline reflects a partial retracement of gains made on Friday following the release of the US consumer price index (CPI). Waterer attributed the pullback to thinner trading conditions and the absence of fresh catalysts, combined with some profit-taking activity among investors.
US markets were closed for Presidents’ Day, and markets in China remain closed for the Lunar New Year holiday. The US consumer price index rose 0.2 per cent in January. Market participants widely expect the US Federal Reserve to maintain current interest rates at its upcoming meeting on March 18. Gold typically performs well in environments with low interest rates, as it does not offer a yield.
Waterer noted that a renewed downtrend in the US dollar would likely be necessary for gold to advance towards $US6000 before the end of the year. KCM is a financial services company providing market analysis and investment strategies to its clients.
