World gold price drops sharply
World gold prices closed the trading session of the week at 2,882.4 USD/ounce, down to 44.5 USD/ounce compared to the beginning of the previous trading session. This is a move that surprised many investors in the context of the precious metal's increase continuously being consolidated in many previous sessions.
According to Kitco, gold prices are struggling as US retail sales fell sharply in January. Weak consumer data shows increased risks for the US economy.
US retail sales fell sharply last month, down 0.9% after rising 0.7% in December (adjusted figures), according to the US Department of Commerce's announcement on Friday.
Phillip Streible - Chief Strategist at Blue Line Futures said that the decline in geopolitical tensions is reducing the safe-haven attractiveness of gold.
This week, US President Donald Trump held a phone call with Russian President Vladimir Putin about the possibility of ending the war in Ukraine. At the same time, despite continued threats of strong trade tariffs, he has delayed major moves until the completion of each country's assessment - expected to be completed in April.
This expert commented that the wave of profit-taking when gold prices increase is also a factor that causes the precious metal to decrease in price.
Gold outlook remains positive
Julia Khandoshko - CEO at Mind Money - said she is not too interested in short-term fluctuations in gold, but focuses on a solid outlook until 2025.
She stressed that even if inflationary pressures remain high, central banks, headed by the US Federal Reserve (FED), will be forced to cut interest rates as the global economy weakens. At the same time, gold will continue to play the role of an important safe haven asset.
The level of instability in the global economy is increasing. The problem is not Donald Trump's specific statements, but their frequency of appearance. The more he speaks, the more chaos the market is. Organizations are looking for a reliable asset and gold is still their main protective gear, she said.
In the short term, James Stanley - senior market strategist at Forex.com believes that gold prices will continue to increase. The bulls are still in control, and I dont think weve seen a peak.
I think there is a possibility of a larger correction before spot gold is testing at $3,000/ounce, but at the moment I am not sure that is a possible scenario. With the current strong trend, I am still leaning towards the possibility of gold increasing.
Sharing the same view, Chairman of Adrian Day Asset Management said that gold is still on the upward trend and there are still factors supporting prices.
Notable economic data next week
Tuesday: Empire State Production Index (economic index measuring the business conditions of the manufacturing sector in New York state, USA. This index is published monthly by the New York branch FED, based on a survey of manufacturers in the region).
Wednesday: US housing data (New builds and Construction Permits), FED meeting minutes.
Thursday: USWeeks Unemployment Insurance Application, FED Philadelphia Production Survey.
Friday: S&P Flash PMI, Current home sales in the US.
See more news related to gold prices HERE...
