Gold prices strengthened as we entered the European session today, Wednesday (December 17th), holding around $4,320 per ounce and remaining close to October's record high of $4,381. This strengthening occurred after the market returned to seeking safe haven assets while awaiting the next major data from the US.
The main drivers came from the US agenda: market participants were focused on Thursday's CPI inflation release and a series of comments from central bank officials. After the latest mixed employment data, the market didn't feel there was enough reason to aggressively increase speculation of an imminent interest rate cut, but the dollar also lacked the energy to rise significantly.
Safe haven sentiment also strengthened due to tensions in Venezuela. Trump increased pressure by ordering a blockade of certain oil tankers, raising supply concerns and adding geopolitical spice to the global market—conditions such as these usually make gold more attractive.
Interestingly, it wasn't just gold: silver also hit a new high, further reinforcing the "flight to precious metals" theme in the European market today. This was also evident in European commodity-related stocks (mining/resource sectors), which were also helped by the metal's rally.
Looking ahead (for the remainder of the European session and into the evening), gold's movement will typically be sensitive to two factors: (1) the direction of the dollar and yields ahead of the CPI, and (2) geopolitical headlines. As long as gold remains above the psychological $4,300 level, the market tends to view the trend as "strong," but the record $4,381 level remains a barrier that keeps prices vulnerable to potential price volatility.
Source: Newsmaker.id
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