Gold prices struggled to keep their grip on the psychological $5,000 level this Monday. The metal slid lower as trading floors across the globe remained dark for holidays. With major players in the US and China taking a break, volume thinned out significantly. This lack of buyers allowed bears to push prices down in early action.
The precious metal could not maintain its momentum from the weekend. It briefly touched a high but fell back as the day went on. Traders are seeing a classic holiday retreat where silence in the market leads to lower prices.
The Holiday Volume Vacuum Impacts Momentum
Monday proved to be a difficult start for gold bulls. The market faced a perfect storm of closures that drained liquidity from the system. Gold prices managed to push to a session high around $5,032 an ounce during the overnight session. But that strength faded quickly. The metal was unable to attract enough bullish attention to stay there.
Selling pressure took over as the hours passed. Spot gold prices last traded at $4,978.1 an ounce. This represents a decline of 1.25% on the day. The drop might seem sharp to some. But it is common when volume is this low.
The United States markets remain closed for Presidents’ Day. This removes the largest pool of institutional investors from the table. There is no Wall Street action to drive the price back up. Banks are closed and futures trading is limited.
Canada is also taking a pause. The Toronto Stock Exchange is closed as Ontario celebrates Family Day. This removes another layer of North American mining money from the daily flow.
Market Snapshot:
- Current Price: $4,978.1 per ounce
- Daily Change: Down 1.25%
- Session High: $5,032
- Key Support: $5,000 (currently broken)
When these major hubs are offline, price swings can happen easily. It does not take a massive sell order to move the needle. A few moderate sales can push the price down when there are no buyers stepping in to absorb them.
China and the Lunar New Year Factor
The weakness in gold is not just about North America. The Asian markets are also in holiday mode. This is a critical factor for physical demand. China is celebrating the Lunar New Year.
Chinese markets are closed for the week. This is significant because China is the top consumer of gold in the world. Usually, the weeks leading up to the New Year are busy with jewelry buying. But once the holiday starts, the markets go quiet.
Why this matters:
- Physical Demand: Gold jewelry buying pauses during the holiday week.
- Shanghai Gold Exchange: The exchange is closed, removing a key price benchmark.
- Liquidity: Asian traders are absent, leaving the European session to carry the load alone.
This creates a gap in the global trading day. Europe opened to see gold already slipping. Without the Chinese buyers to prop up the physical market, the paper market drifted lower. The $5,000 level is a massive psychological barrier. Losing it during a holiday might not signal a long-term crash. But it shows that the bulls are resting just like the markets.
Silver Slides Alongside the Yellow Metal
Gold is not the only metal feeling the pressure. The silver market is seeing similarly quiet trading and heavy results. Silver often moves faster than gold and today is no exception.
Spot silver last traded at $75.96 an ounce. This is down 1.75% on the day. The white metal is having a harder time than gold right now. It has been unable to hold gains above $80 an ounce recently. It is also sitting well off the highs seen last month.
Silver has a disadvantage in this environment. It relies heavily on industrial demand. With factories in China closed for the New Year and US manufacturing data paused for the holiday, there is no news to drive silver higher. It is simply drifting down in the wake of gold.
Experts Weigh In on Geopolitics and Volatility
Analysts are urging caution but not panic. The drop below $5,000 is notable. However, the long-term drivers for gold are still in place. The main driver remains geopolitical uncertainty.
Elior Manier is a Market Analyst at OANDA. He spoke to Kitco News about the current setup. He believes gold prices remain well supported around the $5,000 area despite the dip. The world stage is still messy and dangerous. This keeps investors interested in safe assets like gold.
“Gold can only really correct if the geopolitical risks abate. In any case, at current prices, the rise may stall. To me, more downside is warranted but contingent on geopolitics.”
This suggests that the floor is not falling out. The market is just taking a breather. But traders need to be careful. David Morrison is a Senior Market Analyst at Trade Nation. He sees some technical risks ahead.
Morrison noted that momentum indicators are signaling overbought conditions. The market ran up very fast to get above $5,000. It is natural for it to pull back. The market is still trying to find a solid bottom. This search for support will keep volatility elevated in the coming days.
Most analysts agree on one thing. Corrections will likely be bought. The fundamentals remain strong. Central banks are buying. Debt is rising. Uncertainty is high. These are the fuel for gold rallies. A holiday dip on low volume does not change these facts.
The trading channel around $5,000 is the new battleground. Bulls want to reclaim it. Bears want to push it lower. Once the full market returns later this week, the real fight will begin. For now, the holiday silence belongs to the bears.
Gold prices have dipped in a quiet market environment. The $5,000 level has broken for now. But with key markets in the US and China closed, the true test will come when traders return to their desks. The fundamentals suggest support is nearby. Yet the technical picture warns of more chop ahead. Investors should keep an eye on the headlines. If geopolitical tension stays high, this dip might be short. But for today, the screens are red and the volume is low.
