Precious metals markets witnessed a notable shift during trading on Monday, with gold prices falling below the key psychological support level of $5,000 per ounce. This decline was driven by a recovery in the US dollar index, prompting investors to take profits after the strong gains made by the yellow metal in the previous session.
Details of price movements in global markets
According to current trading data, the spot price of gold fell by 1.29% to settle at $4,977.24 per ounce. This decline follows a strong performance in the previous session, during which the metal recorded gains exceeding 2.5%. Meanwhile, US gold futures (April delivery) fell by 0.76% to $5,008.00 per ounce, reflecting a cautious and watchful stance among traders.
Influencing economic factors: inflation and interest rates
This price movement is closely linked to recent economic data from the United States. US inflation figures, which came in lower than expected, have fueled market hopes that the Federal Reserve (the US central bank) may cut interest rates sooner than anticipated. These expectations were the main driver of gold's rise in the previous session. However, the dollar's rebound today has made gold more expensive for holders of other currencies, reducing its immediate investment appeal.
The inverse relationship between the dollar and gold
Economically, gold and the dollar have a traditional inverse relationship; when the US dollar appreciates, the prices of dollar-denominated commodities—most notably gold—tend to fall. Breaking the $5,000 mark is a pivotal point in both technical and fundamental market analysis, as this level represents a psychological barrier for investors and major investment portfolios.
Gold as a safe haven and future prospects
Despite the current downturn, gold retains its historical status as a safe haven against economic risks and market volatility. Economic analysts are currently focused on the upcoming Federal Reserve meetings, as any clear indication of monetary policy will have direct repercussions for the precious metal. A low interest rate environment reduces the opportunity cost of holding gold, which does not generate interest, thus enhancing its appeal compared to bonds and other debt instruments. This explains the high sensitivity of gold prices to any news related to US interest rates.
