Gold steadies in thin Asian trade after DeepSeek driven sell-off
Gold prices steadied on Tuesday, although China’s holiday thinned liquidity as bullion sought to recover from its worst intra-day performance in more than a month amid a global sell-off sparked by China’s DeepSeek AI model.
Spot gold was steady at $2,739.28 per ounce, as of 0656 GMT. US gold futures rose 0.2% to $2,742.50.
Gold declined more than 1% on Monday, the most since Dec 18, as investors sold off bullion to cover losses stemming from a wider market sell-off that was led by technology stocks as the DeepSeek’s low-cost, low-power AI model led to questions about traditional AI bellwethers.
With China markets closed for the Lunar New Year holidays, attention is now on the US Federal Reserve’s two-day policy meeting that starts later in the day.
Policymakers are expected to leave interest rates unchanged on Wednesday, but US President Donald Trump has said he wants the central bank to lower borrowing costs.
If the Fed keeps rates unchanged, this would be the first pause in the rate-cutting cycle that began last September.
“If [Fed Chair] Jerome Powell leaves the door slightly more ajar to a potential rate cut in coming months, this may pressure Treasury yields and provide an assist to gold,” said Tim Waterer, chief market analyst at KCM Trade.
He said the $2,800 level shapes as being a viable near-term target.
Overall, gold looks set for a record-breaking year due to the heightened economic uncertainty and inflation concerns in Trump’s second term, a Reuters poll showed.
Lacklustre investment demand from exchange-traded funds (ETFs) and the potential impact of tariffs on global growth could affect silver’s prospects, the poll showed.
Analysts, meanwhile, downgraded their 2025 price forecasts for platinum and palladium as demand struggles to improve significantly.
Spot silver eased 0.8% to $29.97 per ounce, palladium was flat at $960.32 and platinum fell 0.8% to $939.55.
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