Gold Ends High: Nine-Week Winning Streak Comes to an End

Drop in Gold and the End of Nine-Week Rise

Gold prices are experiencing a sharp correction after a rally that pushed them into overbought territory, preparing to end a nine-week rising streak. Spot gold is holding above $4,140 per ounce, facing a nearly 3% decline this week, marking its largest weekly loss since May.

Geopolitical Developments and Their Effects on Gold

Investors are assessing the likelihood of improving relations between the U.S. President Donald Trump and Chinese President Xi Jinping ahead of their upcoming trade talks next week. A decrease in negative geopolitical conditions may support demand for safe-haven assets like gold.

Correction After the Rise

Following a rapid rise that began in mid-August, gold prices reached a record high of $4,381.52 per ounce on Monday. However, profit-taking the next day abruptly halted this increase. Additionally, a significant outflow from gold-backed exchange-traded funds (ETFs) was observed, marking the largest single-day exit in five months.

Market Indicators and Future Expectations

Saxo Capital Markets strategist Charu Chanana stated, “The correction looks like it is stabilizing, but volatility will remain high due to broad retail investor participation.” According to Chanana, the next significant resistance level is $4,148, but surpassing the $4,236 level could confirm a return of upward momentum.

U.S. Economy and Consumer Price Index Data

Before this week's correction, technical indicators showed that gold had been consistently in overbought territory since early September. Investors have started turning to options as a means of protecting against price volatility. Attention now turns to the U.S. Consumer Price Index (CPI) data set to be released on Friday; this report will provide the first real signal regarding the state of the economy since the government shutdown.

Increase in Platinum Prices

Additionally, the price of platinum rose by 1.8%, showing movements indicative of a contraction in platinum supply in the London market. On Wednesday, prices were trading at a $70 premium compared to New York futures.