Gold Prices Slip as Stronger US Dollar and Fed Signals Weigh
Gold prices edged lower on Thursday (Feb 5), falling around 0.35% to approximately US$4,930 per troy ounce, ending a two-day rally. The decline was driven by a stronger US dollar after the Federal Reserve signaled caution over further interest rate cuts.
According to Trading Economics, Fed Governor Lisa Cook stated that she would not support additional rate cuts at this stage, emphasizing persistent inflation risks over emerging signs of a slowdown in the labor market.
Market sentiment was further influenced by President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair. Warsh is widely viewed as more hawkish than other candidates, prompting investors to price in a slower pace of potential rate cuts.
On the data front, the ADP employment report showed weaker-than-expected private payroll growth, while the ISM services PMI surprised markets with a stronger-than-forecast increase.
Geopolitical tensions between the United States and Iran also remained elevated, despite plans for nuclear talks in Oman scheduled for Friday. Washington has not ruled out the possibility of military action.
Earlier this week, gold prices surged more than 6%, marking the largest intraday gain since 2008. The rally was fueled by bargain hunting following a sharp correction from last weekend’s record highs.