Gold Recovers Above USD $5,000
Gold recovered ground to stand at above USD $5,000 per ounce in mid-February, with analysts predicting high volatility until it finds a clear direction. Gold prices rose on February 13, after a 3 percent sell-off the day before, with buying fuelled by lower-than-expected U.S. inflation in January. Gold was up 2 percent to USD $5,021.80 per ounce.
Analysts Warn of Continued Volatility
Analysts noted that the sharp upswing in gold prices, which are almost double what they were a year ago, suggests that volatility in bullion will remain high in the near term. “I think it’s hard to say with any confidence that the worst of the volatility is behind us,” Michael Brown, senior market analyst at Pepperstone, was quoted as saying by Kitco News. “I remain of the view that we do need to see a period of consolidation before embarking on the next leg of a run higher.”
Forecasts Point Higher Later This Year
Analysts say gold is likely to move higher later this year, due to a climate of falling interest rates in the United States and expectations of further “safe haven” investor buying due to geopolitical uncertainties. ANZ analysts have raised their second-quarter forecast for gold prices to USD $5,800 per ounce from USD $5,400.
Rate Cut Expectations Strengthen
The latest benign U.S. inflation data has reinforced the view that U.S. rates will fall further this year. Some analysts say that the gold market may ease in the third week of February due to the absence of Chinese buyers because of Lunar New Year celebrations.
The latest U.S. inflation data had led some traders to price a 50 percent chance of a third cut by December 2026, Lukman Otunuga, Senior Market Analyst at FXTM, told Kitco News. “However, it may be too early for bulls to celebrate, with USD $5,000 acting as a significant psychological resistance,” he said.
UK Political Developments and Currency Impact
The pound held steady against the dollar lately but weakened against the euro, due to a growing political crisis in the UK linked to disgraced paedophile financier Jeffrey Epstein. The pound weakened when Sir Keir Starmer risked losing his position as Prime Minister earlier in February over the government’s approval of Peter Mandelson, who was linked to Epstein, as the UK’s ambassador to Washington. Sterling stabilised after it appeared Starmer would remain in office.
UK Economic Outlook
While U.S. interest rates appear to be firmly headed lower, the latest sticky inflation trend in the UK may limit further loosening of monetary policy, analysts said, with two further UK rate cuts expected this year. The UK delivered lacklustre fourth-quarter 2025 GDP growth data, up just 0.1 percent quarter-on-quarter.
