Gold prices edged lower in early Tuesday trading but remain supported above the $5,000 level. The precious metal has come under some pressure since the start of the week, following a resurgence in risk appetite across markets after the landslide victory of Sanae Takaichi in the Japanese election. This outcome has diverted flows away from safe-haven assets and towards equity markets globally. The move has been compounded by easing tensions in the Middle East, further weighing on gold’s safe-haven appeal. However, despite these headwinds, support above the key psychological level of $5,000 remains firm. This resilience is largely underpinned by continued weakness in the US dollar, with which gold maintains an inverse price relationship. The greenback remains under pressure amid the so-called “sell America” trade and expectations of at least two 25-basis-point interest rate cuts by the Federal Reserve. Against this backdrop, this week’s delayed release of US employment data and January inflation figures will be closely monitored by investors seeking clarity on the likely trajectory of US monetary policy. Should the data confirm expectations of a cooling labour market and easing consumer price pressures, there may be scope for further dollar weakness, providing additional upside for gold prices.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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