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0 News Ghana, Latest Updates and Breaking News of Ghana, Roger A. Agana, https://newsghana.com.gh/golds-upward-momentum-faces-tug-of-war-amidst-ai-volatility-and-trade-risks/
Gold prices were on the verge of surpassing $2,800, but a sudden bearish move threw the market into turmoil, disrupting the rally and creating a fierce tug-of-war between bulls and bears. Despite this setback, many believe gold’s upward momentum is far from over.
A major catalyst for recent market volatility has been Deepseek’s swift rise, which has triggered concerns over the valuation of AI-driven assets and sparked a broad-based deleveraging across asset classes, including gold. However, as the market begins to realize that Nvidia’s dominance is secure in the near term and that China’s AI sector is unlikely to disrupt the landscape anytime soon, risk aversion is slowly creeping back into the equation. This shift has removed a major obstacle for gold, opening the door for further price increases.
Gold’s appeal also extends beyond the AI-driven volatility. As a safe-haven asset, it has long been a hedge against global trade risks, and the U.S. government’s firm stance on tariffs with Colombia is a prime example of such risks. With new tariff measures set to be implemented by February 1, traders are reassessing the possibility of more aggressive tariffs ahead. These potential trade policies could lead to domestic inflation and economic uncertainty, driving more people towards gold as a store of value. Additionally, heightened trade risks could accelerate global “de-dollarization” efforts, further strengthening gold’s appeal.
At the same time, political pressure on the Federal Reserve from former President Donald Trump to cut rates, alongside declining 10-year U.S. Treasury yields and a weaker dollar, continues to support the bullish case for gold in the near term.
Looking ahead, much attention is now focused on upcoming developments, including tonight’s Federal Reserve decision, Powell’s speech, and Friday’s core PCE inflation data. If Fed Chair Jerome Powell maintains a hawkish stance and rejects expectations of rate cuts, gold could face a short-term pullback. However, with the market already pricing in at least two rate cuts this year, any indication of a “dovish pause” from Powell could provide a modest boost for gold.
Inflation also remains a key variable in determining gold’s trajectory. Should core PCE inflation come in higher than the expected 2.8% year-over-year increase, it could give the Fed more justification to delay rate cuts, disrupting gold’s upward momentum. Conversely, weaker-than-expected inflation data could exacerbate the divergence between the Fed and political pressure from Trump, fueling additional volatility in gold prices. One thing is certain—the gold market is set for heightened volatility in the near term.
News Ghana, Latest Updates and Breaking News of Ghana, Roger A. Agana, https://newsghana.com.gh/golds-upward-momentum-faces-tug-of-war-amidst-ai-volatility-and-trade-risks/
