Gold prices rose on Friday, supported by a weaker dollar. However, the metal remained on track for a weekly decline after stronger-than-expected U.S. inflation data dampened hopes for a larger 50-basis-point Federal Reserve rate cut.
In Dubai, gold rates edged up, with 24-carat gold rising AED0.5 to AED403.25 and 22-carat gold gaining AED0.75 to AED373.5. Additionally, 21-carat gold gained AED0.25 to AED357.75, while 18-carat gold rose AED0.5 to AED307.
Globally, spot gold was up 0.17 percent to $3,343.65 as of 5:40 GMT. Bullion has lost 1.5 percent for the week. Meanwhile, U.S. gold futures for December delivery gained 0.15 percent to $3,388.40.
Higher PPI data raises Fed rate cut doubts
Gold prices are still adjusting to the impact of the recent increase in the U.S. producer price index, which raised doubts about how aggressively the Fed might cut rates this year.
Data from the Labor Department showed U.S. producer prices rose 3.3 percent year-on-year in July, above forecasts of a 2.5 percent rise, while weekly jobless claims came in lower than expected at 224,000 compared to estimates of 228,000.
Meanwhile, U.S. consumer prices rose only slightly in July, supporting hopes for a Fed rate cut. However, the stronger-than-expected PPI reading has tempered expectations for an aggressive easing cycle, making a 50-basis-point reduction at the next meeting less likely.
If the recent surge in wholesale prices becomes a sustained trend and feeds into faster consumer price inflation, expectations for U.S. rate cuts could be reduced, which may weigh on gold’s appeal as a non-yielding asset.
St. Louis Fed President Alberto Musalem stated that a 50-basis-point rate cut in September is not justified, contrasting with Treasury Secretary Scott Bessent’s view that such a move is possible. Non-yielding gold tends to perform well when interest rates are lower.
Dollar slips ahead of Trump-Putin meeting
Providing some support for gold prices, the dollar slipped 0.2 percent, making the yellow metal cheaper for holders of other currencies.
On the geopolitical front, investors are tempering expectations for a significant breakthrough in ending the Ukraine war from Friday’s meeting between Donald Trump and Vladimir Putin, even though there were some indications of progress.
Ukrainian President Volodymyr Zelenskiy said he cautioned U.S. President Donald Trump ahead of his meeting with Vladimir Putin that the Russian leader was “bluffing” regarding his intentions to end the war.
On Wednesday, Trump warned of “severe consequences” if Putin refuses to agree to peace in Ukraine, without detailing what those repercussions might entail. However, he previously threatened economic sanctions should Friday’s meeting in Alaska fail to produce results.
Read: Crude oil prices fall to $66.67 ahead of Trump’s meeting with Putin
Other precious metals
As gold prices rose on Friday, the precious metals market remained mixed. Spot silver gained 0.08 percent to $38.02. However, platinum fell 0.14 percent to $1,355.25 and palladium dipped 0.17 percent to $1,143.75. Meanwhile, copper held steady at $4.46.
