Tim Waterer: Hawkish Expectations, Dollar Rebound, and Overbought Conditions Trigger Gold Price Correction from Highs

Deep News11:21

Despite gold prices being on track for their largest single-month gain in over forty years (a monthly increase exceeding 20%), they experienced a significant drop on January 30th, with spot gold falling by more than 5% at one point. This volatility is closely linked to market speculation surrounding a potential shift in the Federal Reserve's policy.

The possibility of a less dovish candidate for Federal Reserve Chair, a rebounding US dollar, and gold entering an overbought state collectively contributed to the decline in precious metal prices. This highlights the core logic behind the day's gold price correction: market expectations that the candidate replacing Powell may lean hawkish, altering the interest rate outlook, which, combined with technical pressure from the dollar's rebound from multi-year lows, triggered profit-taking in the precious metals market. In summary, this outlines the immediate drivers behind this gold price correction. Within a long-term uptrend, short-term prices are being tested by both changing monetary policy expectations and market technical adjustments. Prior to this decline, gold prices had hit a historic high of $5,594.82 per ounce on Thursday, underscoring a rapid shift in market sentiment.

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