Gold Prices Dip Over 1% Amid Thin Trading and Profit-Taking: What It Means for Investors in Oman
Gold prices experienced a decline on Monday, influenced by low trading volumes as U.S. and Chinese markets were closed for public holidays. Some traders also engaged in profit-taking following a substantial 2.5% increase in the previous session.
By 0359 GMT, spot gold had decreased by 1.1%, reaching $4,988.04 per ounce. Meanwhile, U.S. gold futures for April delivery fell 0.8%, settling at $5,006.60 per ounce. Tim Waterer, chief analyst at KCM, noted, “Gold has given back some of Friday’s post-CPI gains today due to thinner trading conditions and a lack of fresh upside catalysts.” He pointed out that profit-taking contributed to the decline.
The U.S. markets are observing the Presidents’ Day holiday, while trading in China paused for the Lunar New Year celebrations. According to the Labor Department’s Bureau of Labor Statistics, the Consumer Price Index (CPI) rose by 0.2% in January, following a revised 0.3% gain in December. Economists surveyed by Reuters had anticipated a 0.3% increase. Chicago Federal Reserve President Austan Goolsbee indicated on Friday that while interest rates might be lowered, services inflation remains elevated. Market participants expect the Federal Reserve to maintain interest rates at its upcoming meeting on March 18, but they are pricing in 75 basis points in rate cuts this year, with the first anticipated in July, based on data from LSEG.
Typically, non-yielding bullion performs well in low-interest-rate environments. Waterer commented, “It will likely require the dollar to resume its downtrend for gold to push towards $6,000 before the year ends.”
On the geopolitical front, two U.S. officials informed Reuters that the military is preparing for a potential extended operation against Iran, contingent on President Donald Trump authorizing an attack, which could escalate the existing tensions between the two nations.
In addition, spot silver saw a decline of up to 3.2%, landing at $74.50 per ounce, following a 3% increase on Friday. Spot platinum slipped by 0.4% to $2,054.78 per ounce, while palladium dropped by 0.2% to $1,682.44 per ounce.
Special Analysis by Omanet | Navigate Oman’s Market
The decline in gold prices reflects market volatility, presenting both opportunities and risks for businesses in Oman, particularly in the precious metals sector. Investors should remain vigilant about the evolving economic indicators, such as the anticipated interest rate cuts, which may favor non-yielding assets like gold, while also considering the potential geopolitical tensions that could influence market stability. Smart entrepreneurs should evaluate the profit-taking strategies in light of recent trends and adjust their investments accordingly.
