Quick overview

---

Gold fell below $5,000 an ounce as traders booked profits following a gain fueled by modest US inflation data the day before.

 

Gold dropped as much as 1.5 percent after rising 2.4 percent on Friday when a slight increase in the US consumer price index for January eased fears of a larger jump,

An advantage for precious metals, which don’t pay interest, was that this strengthened the argument for the Federal Reserve to lower interest rates.

The market is still rebalancing between bulls and bears, and there aren’t any obvious triggers to break the range, according to Pepperstone Group Ltd. strategist Dilin Wu. wrote in a note. She claimed that several attempts to push higher at $5,100 failed because selling pressure was created by profit-taking at the top.

Liquidity is lower than normal during Asian trading hours because Chinese markets are closed this week for the Lunar New Year holiday. Authorities in Shenzhen, the nation’s retail center, issued a strong warning against “illegal gold-trading activities” in response to the country’s recent surge in demand for precious metals.

These activities ranged from online live streams promoting bullion sales to apps providing leverage to retail investors.

A wave of speculative buying propelled a multiyear rally to its breaking point, sending gold soaring to a record above $5,595 an ounce in late January. Bullion has since recovered about half of its losses in erratic trading after a sudden, two-day meltdown at the beginning of the month that pulled it back nearly to $4,400.

Hebe Chen, an analyst at Melbourne’s Vantage Markets, said that recent price movements reflect “orderly consolidation and light profit-taking” following the push above $5,000 that followed Friday’s US inflation data. In honor of the president, US markets will also be closed on Monday.