15/02/26

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Gold (XAU/USD) experienced a volatile start to the week, initially surging above $5,000 amidst a weakening US dollar and increased geopolitical risks. Favorable factors included heightened prospects of Japanese intervention in foreign exchange markets following a decisive electoral victory by Prime Minister Sanae Takaichi’s government, which contributed to the yen’s strength against the dollar. Concurrently, reports emerged that Chinese financial regulators had advised institutions to reduce holdings of US Treasuries, raising concerns about market stability and currency dominance. These developments weakened the dollar and supported gold’s early rally.

However, as the week progressed, gold faced significant volatility. On Tuesday, prices retreated slightly as US Treasury yields declined further. The release of US employment data on Wednesday showed robust job creation in January, with 130,000 nonfarm payrolls added — once again surpassing expectations — while the unemployment rate edged lower to 4.3%. This upbeat employment report reduced expectations of imminent Federal Reserve rate cuts. Consequently, gold struggled to maintain its weekly gains but remained comfortably above $5,000, signaling cautious investor positioning.

The situation sharply changed on Thursday when gold plunged over 3%, erasing earlier gains. A sharp sell-off was attributed to broader market concerns surrounding artificial intelligence and algorithmic trading, which accelerated the decline. Silver and copper prices also experienced notable decreases, with silver falling more than 11%. Market participants indicated that profit-taking and technical selling were contributing factors to the decline, which drove prices below the key USD5,000 level.

By Friday, softer US inflation data — showing a decrease in the Consumer Price Index to 2.4% — offered some relief, helping gold recover some territory lost during Thursday’s sell-off. Looking ahead, key economic indicators, including the upcoming GDP figures and manufacturing and services PMI reports, will influence the dollar’s trajectory and gold’s prospects. A resilient growth outlook could bolster the dollar, while signs of slowing growth may provide further support for gold. Meanwhile, risk sentiment driven by equity markets will continue to be a significant factor influencing gold’s price movement.

Technical analysis underscores a cautious outlook for gold, with support levels near $4,870 and resistance expectations around $5,090 to $5,100. These levels, along with broader macroeconomic data, will shape gold’s future trajectory as investors navigate a landscape marked by economic uncertainty and fluctuating monetary policy expectations.