Gold's 5-session record streak pauses, but momentum remains upbeat
Gold prices paused on Thursday after a five-session rally to all-time highs on tensions over trade wars between the world's two largest economies raising worries about economic growth, and in turn, uncertainty about the future path of U.S. interest rates.
Spot gold was down fell 0.2% to $2,860.24 per ounce by 1028 GMT after hitting an all-time high of $2,882.16 on Wednesday. U.S. gold futures shed 0.3% to $2,883.40.
"It's quite clear that gold has got a bit between its teeth, like a racing horse, and the momentum is very much on the upside," independent analyst Ross Norman said, adding that the danger of an escalation in the trade war, especially between the U.S. and China, is raising massive uncertainties.
"But the correction is a natural phenomenon... profit-taking off the highs," Norman said, noting that gold, technically, is overbought with the RSI of about 76, so it is looking a bit overextended.
A Relative Strength Index (RSI) reading above 70 indicates overbought conditions, potentially leading to a correction.
While global trade war concerns have accelerated the flight to safety, "growing bets around tariffs rekindling inflationary pressures could bring gold bears back into the picture, especially if this results in higher for longer U.S. rates," said FXTM senior research analyst Lukman Otunuga.
U.S. Federal Reserve officials pointed to the large policy uncertainty around tariffs and issues arising from the early days of Trump's administration as among the top challenges in figuring out where to take the monetary policy in the months ahead.
Market focus is on the non-farm payrolls report on Friday, which could offer insights into the economy's overall strength and Fed policy path.
"A disappointing jobs print could strengthen the argument around lower U.S. interest rates, boosting gold prices. The same can be said vice-versa," Otunuga added.
Elsewhere, spot silver dropped 0.8% to $32.06 per ounce, and palladium fell 0.2% to $987.75. Platinum rose 0.7% to $985.90.
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