Gold steadied after a sharp decline sparked by a wider selloff across financial markets that may have been amplified by algorithmic trading.
Bullion was near $4,920 an ounce in early trading, after plunging 3.2% in the previous session — the biggest one-day drop in a week. The sudden decline accompanied jitters on Wall Street, where prices buckled across asset classes on concern over the impact of AI on companies’ earnings.
Investors are now looking to US inflation figures due later Friday that may shape expectations for the Federal Reserve’s next move. Robust January jobs data published this week reduced urgency for the Fed to cut interest rates again by midyear. Lower rates are a tailwind for precious metals, which don’t pay interest.
Photo Credit: Bloomberg
The dramatic pullback in gold on Thursday — which didn’t have a clear catalyst — was likely intensified by selling from commodity trading advisers using computer models to bet on price moves, said Michael Ball, a macro strategist at Bloomberg.
Some of the selloff in gold and silver — which dropped almost 11% on Thursday — likely also stemmed from profit-taking. Both metals had clawed back some losses after a historic rout at the turn of the month, and trading had since been choppy.
Despite the pullback, many banks expect gold to resume its upward trend this year, arguing that the drivers behind earlier gains remain intact — including geopolitical tensions, questions over the Fed’s independence, and a broader shift away from traditional assets such as currencies and sovereign bonds. BNP Paribas SA sees bullion at $6,000 by the end of the year, while Deutsche Bank AG and Goldman Sachs Group Inc. also have bullish forecasts.
Spot gold edged up 0.1% to $4,926.79 an ounce as of 8:05 a.m. in Singapore. Silver climbed 0.6% to $75.72. Platinum and palladium rose. The Bloomberg Dollar Spot Index, a gauge of the US currency, was little changed.
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