Gold slides on profit-taking, but…

Gold Slides On Profit-Taking, But Bullish Drivers Remain Intact

Today market analysis on behalf of Bas Kooijman is the CEO and Asset Manager of DHF Capital S.A

Gold eased on Wednesday as profit-taking took hold. The market retreated after recording strong gains during the beginning of the week in reaction to geopolitical uncertainty and economic data weakness. The market could come under pressure due to the seemingly controlled tensions in Latin America, although risks and uncertainty remain.

However, the broader outlook for gold remains constructive. Persistent geopolitical tensions in other parts of the world continue to underpin demand for the metal. Tensions in Eastern Europe persisted, dampening hopes for a near-term ceasefire. Rising frictions between China and Japan remained elevated. US rhetoric over Greenland could also fuel markets’ concerns, on the back of rising tensions among NATO members.

On the macroeconomic front, attention is now on key US labour market data, including the December jobs report, which could provide fresh insight into the next steps for the Federal Reserve’s monetary policy outlook. Markets still price in two rate cuts this year. Weaker signals in upcoming employment or inflation data could strengthen the case for easing, favouring non-yielding assets like gold.

Zaid Barem / ymm