Gold prices edged higher on Wednesday as a weaker dollar and bargain hunting lifted demand following a sharp fall in the previous session. Investors are now watching US inflation data closely for hints on the Federal Reserve’s next move on interest rates.Spot gold rose 0.6% to $4,146.47 per ounce at 0636 GMT, recovering some ground after tumbling more than 5% on Tuesday, according to Reuters.Gold and silver had fallen earlier in the day, extending the previous day’s losses. The yellow metal fell 6.3%, recording its biggest intraday decline in over 12 years. Silver also dipped more than 2%.The drop in these precious metals came as investors rushed to lock in their profits, taking their rapid gains. Concerns are also growing that the rallies have entered the bubble territory, Bloomberg reported.Tim Waterer, chief market analyst at KCM Trade said, “Profit taking moves started to snowball,” adding that the declines reflect “high temptation for traders to take profit at price levels which have never been seen before in the gold market.”The metals were dragged down by a combination of factors including geopolitical factors and the end of India’s season of gold buying.Experts call gold’s recent rally has been remarkable, driven by falling bond yields, steady central bank purchases, and hopes of further monetary easing.Fawad Razaqzada of City Index told Bloomberg, “Markets rarely move in straight lines.” “ While corrections are natural, it is worth pointing out that many investors missed out on the big rally. Soon, they may step in to buy the dip, which should keep the selloff contained.”
