Gold Falls Slightly—Is the Rally Starting to Run Out of Steam?
Gold (XAU/USD) weakened slightly on Thursday (January 15th) after hitting a new record high of $4,643 in the previous session. In recent trading, the price hovered around $4,600 per troy ounce, indicating the market is beginning to lock in profits after the sharp rally.
The main pressure came from strong US economic data. Higher-than-expected PPI and retail sales, coupled with a decline in the unemployment rate last week, have made the market increasingly confident that the Fed will hold interest rates for longer.
Because gold is non-interest-bearing, its outlook typically weakens when the likelihood of sustained high interest rates increases. Furthermore, the dollar index (DXY) has strengthened again to around 99.10, making dollar-denominated gold relatively more expensive for non-dollar buyers.
Data-wise, US retail sales rose 0.6% to $735.9 billion in November, reversing October's contraction and exceeding market expectations. Meanwhile, the November PPI also strengthened, with producer inflation (headline and core) hovering around 3% (YoY)—providing further reason for the Fed to hold off on easing policy.
Several signals from Fed officials also pointed to a "hold on" tone. Neel Kashkari assessed that the economy remains relatively resilient and inflation is moving in the right direction, although still too high. The Beige Book also stated that economic activity is increasing at a "slight to moderate" pace, an improvement compared to previous reports.
On the geopolitical front, demand for safe-haven gold eased slightly after signs emerged that tensions with Iran were not worsening. Trump stated that reports indicated the escalation of the crackdown was "beginning to subside," although he left open the possibility of harsher measures if the situation changed.
However, the market has not completely calmed down. Concerns about the Fed's independence have resurfaced after the issue of political pressure on Fed Chairman Jerome Powell surfaced, although Trump has stated that he has no plans to fire Powell. This combination of factors makes gold vulnerable to "rapid fluctuations": held back by strong data, but supported by policy and geopolitical uncertainty.
Key Points:
- Gold fell after a record high of $4,643, now hovering around $4,600.
- Strong US data (Retail Sales & PPI) reinforced expectations of a steady interest rate.
- The DXY strengthened, dampening interest in gold from outside the US.
- Geopolitical tensions eased slightly, temporarily reducing the safe-haven momentum.
- The Fed's independence issue remains a risk-off factor, maintaining gold volatility. (asd)
Source: Newsmaker.id
