Gold prices saw a slight decline in spot trading today, but managed to hold above the key psychological level of $5,000 per ounce . This movement comes amid a cautious and watchful environment among investors in global markets, awaiting the release of a series of crucial economic data points related to the US labor market and inflation rates later this week.
Gold and silver performance in the markets
In trading details, spot gold fell 0.7% to $5,029.49 an ounce . Despite this decline, the precious metal retained its appeal after a strong 2% gain in the previous session, supported by a drop in the dollar index to its lowest level in over a week. Meanwhile, U.S. gold futures for April delivery also fell, declining 0.5% to settle at $5,052.00.
Looking at recent historical performance, gold had recorded an unprecedented record high of $5,594.82 on January 29, reflecting the significant momentum the precious metal has been experiencing recently.
silver fell 2.1% in spot trading to $81.64 , after a significant jump of nearly 7% in the previous session. It's worth noting that silver reached an all-time high of $121.64 on the same date as gold's record peak in late January.
Impact of economic data and monetary policy
The upcoming data is of paramount importance as it will provide the Federal Reserve (the US central bank) with clear indications of the future path of interest rates. Historically, there has been an inverse relationship between interest rates and gold; higher interest rates increase the opportunity cost of holding the non-yielding metal, thus putting downward pressure on its price, and vice versa.
In the context of economic indicators, White House economic advisor Kevin Hassett stated that job gains in the United States may slow in the coming months. He attributed this to a slowdown in labor force growth coupled with rising productivity, factors that are playing a pivotal role in discussions within the Federal Reserve regarding the timing and magnitude of any potential changes to monetary policy.
Gold as a safe haven amid geopolitical tensions
Gold prices are not driven solely by economic data; geopolitical tensions also play a key role in bolstering its status as a safe haven. In this regard, Ilya Spivak, head of macroeconomics at Tasty Life, noted that the economic competition and "cold war-like" tensions between the United States and China are unlikely to end in the near future.
Spivak added that this complex geopolitical reality puts gold in a privileged position, as investors tend to hedge with the yellow metal during times of global political and economic uncertainty, giving it a "bull advantage" in the long term for years to come.
