Dollar & demand weakness
Gold prices pulled back sharply this week, slipping below the $5,000 level as demand softened during China’s Lunar New Year holidays and the U.S. dollar strengthened. Precious metals such as silver also saw significant declines, reflecting subdued trading activity and broad risk-off sentiment. The downturn is linked to lower liquidity from Asian markets and investor focus on macroeconomic signals rather than safe-haven buying.
On the fundamental side, gold has been pressured by: • A firmer U.S. dollar, making bullion more expensive for holders of other currencies. • Ongoing geopolitical negotiations (e.g., U.S.-Iran and Russia-Ukraine talks) reducing urgent safe-haven demand. • Holiday-induced low liquidity in key Asian markets.
Despite the recent weakness, some long-term forecasts still point to broader upside over the year, driven by inflation expectations and central bank buying, though short-term volatility remains high.
Technically, XAU/USD remains in a short-term bearish pattern, with key support levels around prior lows near $4,400–$4,500. As long as the price stays below major resistance levels around the $5,000 area, bearish momentum may persist. Volume metrics and chart structure suggest traders are cautious, weighing macro signals against potential rebounds.
Analysts expect continued volatility for the remainder of February, with the broader range between roughly $4,900 – $5,700 in focus depending on geopolitical developments and U.S. monetary policy cues. Inflation and risk sentiment could provide intermittent support, while a stronger dollar will likely cap upward moves.