Gold declines to near $4,850 as low liquidity, easing tensions weigh on demand

• Gold price tumbles to near $4,860 in Wednesday’s early Asian session. 

• Low liquidity and easing geopolitical tensions weigh on the yellow metal. 

• The FOMC Minutes will be in the spotlight later on Wednesday.

Gold price (XAU/USD) attracts some sellers to around $4,860 during the early Asian trading hours on Wednesday. The precious metal falls amid thin holiday trading, with much of Asia closed for the Lunar New Year. Traders will keep an eye on the Minutes of the Federal Open Market Committee (FOMC), which will be published later on Wednesday. 

Market liquidity remained low due to holidays in major regions. “With China on holiday for much of the week, liquidity is thinner and it’s unclear whether there’s enough momentum to push prices materially lower or whether dip buyers will be tempted back should we see renewed softness in the US dollar,” said Fawad Razaqzada, a market analyst at Forex.com.  

Furthermore, easing tensions between the United States (US) and Iran could undermine traditional safe-haven assets such as Gold. Iranian Foreign Minister Abbas Araqchi said on Tuesday that both countries reached an understanding on the main “guiding principles” in talks aimed at resolving their longstanding nuclear dispute, but that does not mean a deal is imminent. 

Traders will closely monitor the FOMC Minutes for more clues from the US Federal Reserve (Fed) about the future interest rate path. Any dovish stance by the US central bank could drag the US Dollar (USD) lower and support USD-denominated commodity prices in the near term.