Gold on the Verge of Breaking Its 9-Week Rally
Precious metals markets witnessed a sell-off on Friday, pushing gold down on a weekly basis after nine consecutive weeks of gains, bringing the price of an ounce to around $4,085.
This decline follows a series of historic records for the yellow metal in recent sessions.
Trading Highlights:
- A sharp weekly decline of more than 6%, the largest in five years.
- A record daily loss (last Tuesday) not seen in the markets in five years.
- Large withdrawals from gold exchange-traded funds (ETFs), recording the largest drop in holdings by weight in five months.
Background of the Ups and Downs:
Despite this decline, gold has maintained annual gains of up to 55% since the beginning of the year, recording one of its best performances in recent years.
Several factors have contributed to this historic rise, most notably:
- Continuing trade tensions between the United States and China, with new trade talks between the two countries expected next week.
- Geopolitical risks are rising after Washington imposed new sanctions on Moscow.
- Continued expectations of the Federal Reserve cutting interest rates two more times by the end of the year.
Future Outlook:
This decline is a natural correction given the significant gains gold has recently achieved, as investors have taken profits after a long upward trend.
The flow of economic data, particularly the Consumer Price Index report due later today, will also be a crucial factor in guiding monetary policy expectations and, consequently, gold prices over the coming period.
The yellow metal remains in a strong position in the medium term, supported by global market instability and the continued low interest rate environment, making it a preferred safe haven for investors in turbulent times.
