FX.co ★ Gold Pares Some Gains, Still Remains at Historic High

Gold prices soared to $4,887 per ounce before settling back to approximately $4,840 on Wednesday. This change occurred as geopolitical tensions, which initially drove the price increase, began to subside. The decline followed President Trump’s remarks at Davos, where he dismissed the use of military action concerning Greenland. This alleviated immediate geopolitical concerns, boosting equities and Treasuries and prompting profit-taking after the significant price rise. Earlier, gold’s upswing was spurred by fresh tariff threats related to Greenland, which weakened the dollar and encouraged investors to turn to non-sovereign assets. Additionally, there was a notable sell-off in Japanese government bonds, prompted by election-related tax-cut promises that raised fiscal worries. Although US 10-year bond yields remained high, a weakening dollar and uncertainty surrounding the Federal Reserve's short-term policy decisions continued to lend support to gold, maintaining its price above previous levels despite the waning upward momentum.