Gold prices fell as market participants began to ignore geopolitical escalation and instead focused on a busy slate of US economic data this week. Gold weakened after rallying more than 4% in the last three sessions, now hovering near the $4,455/oz area.

On the geopolitical front, tensions remain high: President Donald Trump said Venezuela would hand over 50 million barrels of oil to the US, while the White House also ruled out the use of force to control Greenland. In Asia, China imposed export controls to Japan on goods potentially used for military purposes. However, instead of continuing the risk-off, the market shifted its attention to US data—particularly the December jobs report released Friday—after weaker-than-expected manufacturing indicators reinforced speculation that the Fed could cut interest rates again.

Expectations for easing were further reinforced by comments from Fed Governor Stephen Miran, who said the central bank would need to cut interest rates by more than 1 percentage point by 2026, as monetary policy is still considered to be holding back the economy. Last year, a series of interest rate cuts fueled the precious metal—a non-yielding asset—amidst gold's record performance (its best since 1979), spurring central bank buying and inflows from gold ETFs. Silver's rally was even more aggressive, nearly 150%, fueled by concerns about supply shortages and potential US import tariffs.

However, the market is also wary of near-term pressures from commodity index rebalancing. Citigroup estimates a potential outflow of approximately $6.8 billion from gold futures contracts, and a similar amount from silver, due to weighting adjustments in the two largest commodity indexes.

On Wednesday, spot gold fell 0.9% to $4,453.85/oz (11:41 a.m. London). Silver weakened 2.4% to $79.3181/oz (though still up >10% year-to-date). Platinum plunged 4.5% and palladium fell 3.8%. Meanwhile, the Bloomberg Dollar Spot Index remained relatively stable. (alg)

Source: Newsmaker.id