Market Insights

USD and US bond yields declined, boosting gold prices to their highest level in over a week, briefly touching the 2030 mark; concerns over global demand overshadowed the impact of geopolitical tensions, causing oil prices to drop by over 1%.  

The Middle East conflict boosts the safe-haven appeal of gold, with gold prices continuing to rebound on Monday, edging up slightly; signs of weakened demand offset concerns over tight supply, leading to a slight increase in oil prices. 

Gold saw a slight increase last Friday, but due to hot inflation data and the prospect of the Fed cutting interest rates early cooling down, gold recorded a second consecutive weekly decline with a 0.51% drop last week.  

Dragged down by U.S. retail sales data, the U.S. dollar and Treasury yields declined, prompting a rebound in gold, which closed up by 0.6%.  

Prior to this, US inflation data came in higher than expected, prompting investors to reduce bets on the Federal Reserve’s early rate cuts. As a result, the price of gold fell for six consecutive trading days.  

The latest released data shows that the core CPI (Consumer Price Index) in the United States for January recorded a rate of 0.4%, nearly extinguishing market expectations for a Fed rate cut in May.  

Due to the latest release of US initial jobless claims being stronger than market expectations, the hope for an early interest rate cut by the Federal Reserve diminished, leading to a strengthening of the US dollar and an increase in bond yields, causing gold prices to decline, briefly falling near the 2020 level. 

Investors await clues from Federal Reserve officials on the interest rate path, with gold prices holding steady, dipping by 0.04%; boosted by larger-than-expected declines in US gasoline inventories and escalating tensions in the Middle East, oil prices have risen for the third consecutive day.  

The dollar and US Treasury yields retreated, providing a rebound opportunity for gold prices, which rose by 0.5%; the EIA released the short-term energy outlook for February, lowering the forecast for US crude oil production in 2024.  

In January, the growth of the service industry in the United States accelerated, further reducing the possibility of interest rate cuts in March, once again dampening the bullish sentiment on gold.