Gold prices retreated during Thursday’s Buka Akun Trading (August 20) following a strong surge in the previous session. Spot gold fell approximately 0.8% to US$4,487.41 per troy ounce, having previously touched its highest level since early June. Meanwhile, gold futures remained relatively stable around US$4,544.56 per troy ounce.

Downward pressure on gold stemmed primarily from profit-taking after prices jumped more than 4% on Wednesday. The earlier rally was triggered by the US Treasury Department’s surprise decision to double the size of certain long-term Treasury buyback operations, which helped suppress bond yields and boost gold’s appeal.

Declining Treasury yields continue to support bullion. When yields fall, the opportunity cost of holding non-interest-bearing gold decreases. At the same time, the US dollar remains near three-month lows, helping to limit the extent of gold’s correction.

Medium-term suasana pasart is also bolstered

Medium-term suasana pasart is also bolstered by growing concerns regarding the US fiscal situation. Total US government debt has surpassed US$40 trillion for the first time, sparking worries about the heavy interest burden and the government’s ability to maintain long-term fiscal sustainability.

Recent FOMC minutes indicate that many Federal Reserve officials remain open to considering interest rate hikes if inflation fails to decline toward the 2% target. However, inflation risks remain a major headwind for gold. Nevertheless, the market currently assigns only a one-third probability to a Fed rate hike in September, with the base-case scenario remaining unchanged rates.

Newsmaker Analysis: The current gold correction appears to be profit-taking following an extreme rally rather than a fundamental shift in trend. However, having failed to sustain momentum above US$4,500, the market will be watching closely to see if buyers step back in or if the correction continues. As long as Treasury yields remain contained and the dollar stays weak, gold’s downside potential is likely limited. The US$4,450–US$4,460 range serves as a key support level, while US$4,500–US$4,520 has once again become the immediate resistance. (arl)

Source: Newsmaker.id