Gold Prices Slide Amid Low Liquidity and Strong Dollar Pressure

On Thursday, gold prices experienced a decline in a low-liquidity market, coming off a significant gain in the previous session. The drop was primarily influenced by a strong dollar, positioned ahead of critical U.S. inflation data that may impact the Federal Reserve's future interest rate decisions. Spot gold decreased by 0.2% to $4,968.10 per ounce, while U.S. gold futures fell by 0.4% to $4,987.60.

The downturn is attributed to ongoing thin liquidity conditions prompted by the Lunar New Year holidays affecting major Asian markets, including Mainland China, Hong Kong, and South Korea. Despite the U.S. dollar reaching a one-week high, which makes dollar-priced bullion costlier for foreign investors, the Fed minutes revealed differing opinions among policymakers about potential interest rate hikes or cuts contingent on inflation figures.

Market watchers are eyeing upcoming jobless claims data and the Personal Consumption Expenditures report, the Fed’s favored inflation gauge. These reports could reshape interest rate cut expectations, tentatively set for June. Gold and silver are anticipated to stabilize before any substantial price increase, with silver ranging between $70 and $90, and gold expected to waver between $4,800 to $5,100.