Gold rose modestly, holding above $5,000 an ounce, after weak US retail sales boosted expectations that the Federal Reserve may move toward interest-rate cuts.
Bullion climbed as much as 0.6% following data showing consumer spending unexpectedly stalled in December. Investors are now focused on the upcoming January jobs report, which could provide clearer direction on Fed policy.
After surging to a record above $5,595 in late January on geopolitical tensions and policy uncertainty, gold tumbled nearly 13% in two sessions due to heavy speculative selling. Prices have since recovered about half those losses and are consolidating near the $5,000 level.
Major banks remain bullish, with BNP Paribas forecasting gold at $6,000 by year-end. Lower borrowing costs would typically support the metal, though Fed officials remain divided on the timing of any rate cuts.
Spot gold was up 0.3% at $5,038.66 an ounce in Singapore, while silver gained 0.6%.
Frequently Asked Questions
Why did gold rise above $5,000 again?
Gold gained after weak US retail sales data increased expectations that the Federal Reserve may cut interest rates, which typically supports non-yielding assets like gold.
How do interest rate cuts benefit gold?
Gold does not pay interest. When rates fall, the opportunity cost of holding gold decreases, making it more attractive compared to bonds and other interest-bearing assets.
What caused gold’s recent sharp correction?
After hitting a record above $5,595 in late January, heavy speculative buying led to an overheated rally. Profit-taking triggered a sharp 13% drop in just two sessions.
What are major banks forecasting for gold?
Several banks remain bullish. BNP Paribas expects gold to reach $6,000 by year-end, while Deutsche Bank and Goldman Sachs also maintain positive outlooks.
What key factors should investors watch now?
Upcoming US economic data, especially the jobs report, Federal Reserve policy signals, geopolitical tensions, and movements in the US dollar will likely drive gold’s next move.
