The gold metal market had fallen far from its positive position yesterday at $2,364.59 after the sentiment showed that investors decided to wait for the announcement of the US Consumer Price Index (CPI) report which has the potential to change the tide of the global economy.
Inflation dynamics play an important role in shaping monetary policy. Any indication of a decrease in the CPI could prompt a more 'soft' policy stance by the Federal Reserve (Fed).
Meanwhile, the price of gold is now at $2,339.75 which is up by 0.14% since it opened in the Asian trading session early this morning.
Yesterday's sharp decline was in response to several high-impact economic indicators to be released this week. The main element that most affects gold this week is the implications of the US CPI report.
If this report shows that inflation is slowing, it could further strengthen the dovish stance by the Fed that has been planned since the beginning of the year.
This scenario also usually drives the price of gold as a hedge against currency depreciation and reduces the cost of asset holders. It also pushed the domestic market closer to highs and high risk.
So, the safe gold market is now forced to lower for a while unless unexpected geopolitical tensions occur in the near term.
External factors, talk of interest rate cuts, weak US NFP report and low consumer sentiment also pushed the price movement.
However, the market must contend with global dynamics such as the impact of US tariffs on Chinese EVs and volatile crude oil prices.
These factors are likely to give a clearer picture of whether gold will maintain its strength as a traditional asset in protecting value against macroeconomic risks.
