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A Week of Stalemate in the Face of Mixed Signals

by Kaan Küçükemiroğlu
A Week of Stalemate in the Face of Mixed Signals

While last week saw a slight dip in gold prices, this week brought us relative stability, with the ounce hovering around $2010. This apparent stalemate reflects a tug-of-war between opposing forces at play in the market.

Data Pushes Hawkish Hopes: Unexpectedly strong US Q4 GDP data which came at 3.3% has bolstered the Fed's case for maintaining higher interest rates for longer. Concerns about inflation fueled by supply chain disruptions further solidify this stance, casting a shadow over hopes for immediate rate cuts.

Central Banks Sound the Cautionary Trumpet: The ECB's decision to hold rates at 4% aligns with the global trend of measured monetary policy adjustments. This cautious approach dashes investor expectations of swift and aggressive easing, adding to the uncertainty surrounding gold's direction.

High Prices Weigh on Physical Demand: Despite the price holding firm, gold's extended stay above $2000 per ounce has had a notable impact on physical demand. Preliminary data reveals a significant drop in European and North American bar and coin sales during Q4 2023, with many investors opting to wait for a price correction before re-entering the market.

2024: A Year of Political Battles: This year promises to be a year of high-stakes elections across the globe, with the US presidential race and the UK General Election taking centre stage. In the US, Donald Trump, the Republican frontrunner, presents uncertainty for global markets, as his return to office could bring significant shifts in both foreign and economic policies.

Looking Ahead: With data, central bank actions, and political uncertainties all intertwining, predicting gold's trajectory in the coming weeks remains a challenge. Stay tuned as we navigate this complex landscape and provide you with insightful analysis and updates.

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Disclaimer: This information is for general knowledge only and does not constitute investment advice. Please consult with a qualified financial advisor before making any investment decisions.


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