Gold prices began to stabilize on Wednesday after three consecutive days of decline. The precious metal was trading around $3,950 per ounce, ahead of a crucial meeting between US President Donald Trump and Chinese President Xi Jinping. The market is optimistic due to hopes for a breakthrough in US-China trade. There's even news that the US is ready to lift some tariffs if China takes a firmer stance on the export of chemicals used to make fentanyl. This sentiment has made investors more willing to invest in riskier assets, not just gold.

Previously, gold had gone on a rampage, soaring to a record high above $4,380 per ounce last week. However, that overheated rally was quickly corrected as some traders felt the price was too high. Although now down significantly from its peak, gold is still up approximately 50% year-to-date. This significant increase was driven by central bank buying and concerns about the continued erosion of the value of banknotes due to the country's growing debt and deficit. Large and retail investors are also entering gold ETFs, despite a significant outflow from SPDR Gold Shares last Monday.

Meanwhile, gold market participants are debating: is this just a short break before rising again, or is it already starting to weaken? At the London Bullion Market Association (LBMA) precious metals conference in Kyoto this week, the majority of market participants remain bullish. A survey of 106 participants showed that many see gold approaching $5,000 per ounce within 12 months. Analysts like Chris Weston of Pepperstone said that as long as gold can hold around $3,900 for the next-month futures contract, buyers will likely feel comfortable entering again. This means that selling pressure may be almost over.

Another factor at play: the Fed. Market participants are awaiting the Fed's interest rate decision, with speculation of a rate cut. Typically, lower interest rates are positive for gold because it doesn't pay interest. But the effect isn't that simple. Low yields also make technology stocks more attractive due to expectations that their performance will exceed expectations. So some money is flowing into stocks, not all of it. As of Wednesday morning Singapore time, the spot gold price was down 0.1% to $3,949.10 per ounce. Silver held steady, platinum weakened slightly, and palladium also fell slightly, while the US dollar index remained virtually unchanged. (az)

Source: Newsmaker.id