Gold falls to near $4,900 as selling pressure intensifies

NEW YORK (February 14th) Gold price (XAU/USD) faces some selling pressure around $4,910 during the early Asian session on Friday. The yellow metal tumbles over 3.50% on the day, with algorithmic traders appearing to amplify the precious metal’s sudden drop. Traders will closely monitor the release of the US Consumer Price Index (CPI) inflation report for January, which will be released later on Friday. 

Concerns about Artificial Intelligence (AI) spurred a sell-off across financial markets, with margin calls also likely adding to the downtick. “Margin calls also likely added to the selloff, with some investors forced to exit positions in commodities, including metals to provide liquidity,” said Nicky Shiels, head of metals strategy at MKS PAMP SA.

Furthermore, stronger-than-expected US January employment data firmed expectations that there won’t be a Federal Reserve (Fed) rate cut soon. This, in turn, reduces the appeal of holding non-yielding Gold.

Nonfarm Payrolls (NFP) rose by 130,000 jobs in January, following a downwardly revised 48,000 increase in December, according to the US Bureau of Labor Statistics (BLS) on Wednesday. The Unemployment Rate edged down to 4.3% in January from 4.4% in December. 

Traders brace for the US CPI inflation data on Friday for more cues on the Fed’s monetary policy path. The headline and core CPI are projected to show an increase of 2.5% YoY in January. Any signs of softer inflation could revive some rate cut bets and boost the precious metal in the near term. 

FXStreet