Editor’s Note
After a sharp pullback, gold prices demonstrated notable resilience in Asian trading, rebounding over 1% as bargain hunters stepped in. While safe-haven flows have moderated, analysts highlight that the long-term case for gold as an inflation hedge remains intact, supporting the market’s underlying strength.
On February 19, after a deep retreat in the previous trading session, international gold prices showed resilience during Wednesday’s Asian trading hours. The entry of bargain-hunting funds helped spot gold recover to around $4,934.16. RYOEX stated that although gold had experienced a single-day drop of over 2% due to fading safe-haven sentiment, investors’ long-term demand for gold as an inflation-hedging asset remains unchanged. With spot gold recording a 1.2% rebound, market focus has shifted back from the short-term easing of geopolitical tensions to the evolving path of the Federal Reserve’s monetary policy.
From a market environment perspective, overall trading volume remained relatively light as some regions were still in a holiday phase, which to some extent amplified price volatility. Related analysis suggests that the “guiding principles” reached in US-Iran negotiations have significantly alleviated market concerns about escalating conflict, leading to a squeeze in gold’s safe-haven premium. RYOEX cited relevant factual data, indicating that the US Dollar Index rose 0.3% on Tuesday, further increasing the cost of dollar-denominated metals. Meanwhile, silver and platinum recorded rebounds of 3% and 2% respectively on Wednesday, and benchmark copper futures also rose 1% to $12,705.20 per ton, showing a cyclical recovery in overall sentiment across the commodity market.
Currently, trader sentiment is generally in a state of cautious observation, with a key focus on the upcoming release of the Federal Reserve’s January policy meeting minutes. RYOEX believes these minutes will serve as an important gauge for measuring the scale of future monetary easing. Additionally, the PCE price index to be released on Friday, as the Fed’s preferred inflation indicator, will directly determine the urgency of interest rate cuts based on its reading. Typically, changes in the interest rate environment are negatively correlated with the attractiveness of non-yielding assets, so even minor fluctuations in inflation data could trigger a new round of volatility in the metal markets.
As the logic of global asset allocation undergoes restructuring, the precious metals market is attempting to find a balance between high interest rates and potential easing expectations. RYOEX believes that although a strong US dollar and delayed expectations for rate cuts are putting pressure on gold prices in the short term, this phase of price decline conversely provides a feasible entry zone for long-term capital to re-enter the market. In the coming days, if PCE data shows a continued slowdown in inflationary pressures, it will provide more solid upward momentum for gold.
