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Yesterday, the price of gold fell after two days of growth as investors took profits in a volatile market that is still trying to find a clear direction after a historic drop. Silver also declined.
The price of spot gold decreased by 1.4% before partially compensating for losses, now trading just above $5000 per ounce. Traders are awaiting US data, set to be released this week, to gain insight into the direction of Federal Reserve policy. Although the price of gold has decreased by approximately 10% since reaching its historical peak on January 29, it is still rising confidently this year.
A key factor influencing gold remains geopolitical tensions worldwide and the reorientation of many countries towards safe-haven assets, away from US government debt. In times of uncertainty, investors continue to diversify their portfolios by including precious metals. In the long term, the outlook remains positive. Growth in global GDP and a supply shortage in the precious metals market support the upward trend. Investors focusing on ETF funds are noting record inflows of capital into gold assets.
The recent decline in gold indicates profit-taking and position reduction rather than the resumption of the frenzy that followed a significant sell-off at the end of January. Gold must hold above the $5000 per ounce level despite the recent drop. The $ 5,000 mark is a psychological threshold that may become a key technical barrier for sellers, even though buyers remain cautious after the volatility.
Recall that at the end of January, precious metal prices sharply declined when a record jump caused by speculative trading led to overheating in the markets. However, many factors supporting the multi-year rally—heightened geopolitical risks, active central bank purchases, and investor outflows from government bonds and currencies—remain in place.
Many banks and asset managers, including Deutsche Bank AG and Goldman Sachs Group Inc., believe that gold will recover due to these long-term demand factors. Highlighting stable official demand, the People's Bank of China extended its gold purchasing program for the 15th month in January.
Looking ahead, the data set to be released later this week will provide insights into Fed policy following President Donald Trump's appointment of Kevin Warsh as the next head of the central bank. The January employment report, released on Wednesday, is expected to show signs of stabilization in the labor market. US inflation data is scheduled for Friday.
Regarding the current technical picture for gold, buyers need to reclaim the nearest resistance at $5051. This will allow them to target $5137, above which it will be quite challenging to break through. The furthest target will be the $5223 area. In the event of a decline in gold, bears will attempt to take control over $4975. If they succeed, a breakout of this range will deal a serious blow to the bullish positions and push gold to a low of $4893, with a prospect of reaching $4835.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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