Gold prices unable to hold $5,000 level in quiet holiday trading

Overnight, gold prices managed to push to a session high around $5,032 an ounce but weren’t able to attract much bullish momentum, with Chinese markets closed for the week to celebrate the Lunar New Year.

The precious metal has seen muted but consistent selling pressure since its overnight highs. Analysts are not expecting to see any major moves Monday, as U.S. markets are closed in recognition of Presidents’ Day. Even Canada’s Toronto Stock Exchange is closed Monday as Ontario celebrates Family Day.

Spot gold prices last traded at $4,978.1 an ounce, down 1.25% on the day.

The silver market is seeing similarly quiet trading. Spot silver last traded at $75.96 an ounce, down 1.75% on the day. Silver has a slightly bigger disadvantage than gold, as it has been unable to hold gains above $80 an ounce and is well off its highs seen last month.

Although gold prices are establishing a new trading channel around $5,000 an ounce, analysts warn that the market is still trying to find a bottom, which will keep volatility elevated. However, most analysts expect that corrections will eventually be bought, as fundamentals in the market remain strong.

In a comment to Kitco News, Elior Manier, Market Analyst at OANDA, said that gold prices remain well supported around $5,000 an ounce as geopolitical uncertainty remains elevated.

“Gold can only really correct if the geopolitical risks abate. In any case, at current prices, the rise may stall,” he said. “To me, more downside is warranted but contingent on geopolitics.”

David Morrison, Senior Market Analyst at Trade Nation, said that he sees some downside risks to gold, with momentum indicators still signalling relatively overbought conditions.

“The big question now is whether it can stage a sharp rally from here to attempt a fresh all-time high, or if it requires more of a pullback to reset momentum. While the daily MACD has pulled back from overbought levels, it is a long way above the ‘neutral’ line. At the very least, gold may have to consolidate further before higher prices are seen. And there’s always the possibility that the top is already in,” he said in a note.

Morrison said that gold and silver could continue to consolidate until they get a clear message from the Federal Reserve, as it is expected to maintain a neutral monetary policy stance until at least June.

Daniel Hynes, Senior Commodity Strategist at ANZ, said that, following cooler-than-expected inflation data, expectations have picked up for a potential third rate cut by December.

“The long-term story for gold also remains positive. The macroeconomic environment looks supportive,” he said. “Geopolitical and economic uncertainties will likely persist, with Trump continuing to use tariffs as threats. The market’s attention is gradually shifting to the potential impact of tariffs, which has yet to fully emerge in economic and inflation data, and doubts remain around future Fed credibility. Such a backdrop will intensify investors’ appetite for real assets like gold.”