Gold Price News: Gold Dips as All-Time Highs Attract Profit-Taking

Gold prices fell on Tuesday, as traders appeared to take profit after the recent gains, which took prices to all-time intraday highs on Monday.

Prices fell as low as $2,890 an ounce on Tuesday, down from a fresh high of $2,958 an ounce on Monday.

Market mulls implications of Ukraine peace talks

The recent gains, which took gold prices to within striking distance of $3,000 an ounce for the first time, appeared to run out of steam on Tuesday, suggesting some traders had taken the higher prices as an opportunity to lock in profits.

One of the catalysts for a re-think on gold’s seemingly unstoppable rally has been awareness that political efforts to find peace in Ukraine could generate results within weeks. Since heightened geopolitical risk has been a major factor in gold’s strength, an end to hostilities between Russia and Ukraine could remove a supportive prop for precious metals.

Central bank behaviour will be key to gold’s fortunes, as they have been an important element for demand in recent years, diversifying their reserves into gold in response to the freezing of Russian assets.

Technical analysis

On the technical charts, gold’s failure to punch through rising oblique minor resistance in recent days (currently at $2,965 an ounce) suggested upside momentum could be stalling, and high Relative Strength Index readings also began to hint at gold nearing overbought territory since mid-February. Should prices fall further, the next level to watch would be rising oblique major support at $2,848 an ounce.

Upcoming data

Looking ahead, the markets will be watching out for Thursday’s Euro Area economic sentiment figures and ECB monetary policy meeting accounts for any clues on the path forward for interest rates in Europe. Thursday will also bring monthly US durable goods orders, Q4 GDP growth figures and weekly initial jobless claims figures, for the latest health-check on the US economy. Tepid economic figures would indicate a weaker dollar and a looser monetary policy outlook, supporting gold, while upbeat economic data would suggest a stronger dollar and higher interest rates, weighing on gold.