By Konstantinos Chrysikos, Head of Customer Relationship Management at Kudotrade
Gold recorded a pullback on Tuesday amid subdued trading conditions. Thinner liquidity amid holidays in major markets could exacerbate short-term price swings. However, the broader outlook for bullion remains largely intact.
On the macro front, recent softer US inflation readings have shifted market expectations toward three Federal Reserve rate cuts, rather than two. That repricing has pushed treasury yields to multi-month lows, reinforcing gold’s appeal. In the UK, expectations that the Bank of England could cut interest rates as early as March add to the monetary policy easing narrative.
Geopolitically, risk premia remain elevated. While diplomatic channels are active in Eastern Europe and the Middle East, actual deals remain elusive in both regions, sustaining risks and demand for the precious metal.
Additionally, ETF flows also improved meaningfully, with a rebound of 14.8 tonnes after the prior week’s heavy outflows. Attention now turns to US GDP and PCE data on Friday, alongside the ongoing peace discussions, as the next decisive catalysts.