Gold prices retreated in early Thursday trading but remained close to the all-time highs reached in the previous session. Traders reacted positively to Donald Trump’s appearance in Davos, where he ruled out the use of force to gain control of Greenland and withdrew threats to impose new tariffs on Europe. The move revived risk appetite, lifting equity markets and weighing on demand for safe-haven assets such as gold. At the same time, the US president’s U-turn also supported the US dollar as the “sell America trade receded, creating an additional headwind for the precious metal. However, tensions between the US and Europe remain elevated, with both sides appearing increasingly distant. This rift is likely to continue generating geopolitical uncertainty, a dynamic that remains highly supportive of gold over the medium to long term. In the near term, traders will stay alert to geopolitical developments and will also focus on the release of US Q3 GDP figures and PCE data, the Federal Reserve’s preferred inflation gauge. These releases could help shape expectations around future rate cuts, influencing the dollar and, by extension, gold prices, given the inverse relationship between the two assets.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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