Gold prices fell marginally on Thursday as investors remained cautious ahead of the release of key U.S. payrolls data which could provide further insights into the Federal Reserve‘s monetary policy outlook.
In the UAE, gold rates rose with 24-carat gold gaining AED0.5 to AED320.25 and 22-carat gold gaining AED0.25 to AED296.50. Additionally, 21-carat gold went up AED0.5 to AED287.25 while 18-carat gold rose AED0.25 to AED246.
Globally, spot gold dipped 0.07 percent to $2,650.51 per ounce, as of 6:23 GMT. Meanwhile, U.S. gold futures fell 0.04 percent to $2,675.05.
The dollar index fell 0.14 percent to 106.17, traditionally making bullion more attractive for other currency holders.
Powell signals slower rate cut pace
Fed Chair Jerome Powell said on Wednesday the U.S. economy is stronger than the central bank expected in September when it began trimming rates, signaling his support for a slower pace of cuts in the future. The Fed’s Beige Book showed on Wednesday that U.S. economic activity expanded slightly in most regions since early October, with inflation rising at a modest pace and businesses expressing optimism about the future.
Gold is considered a hedge against geopolitical risks and inflation. However, higher interest rates reduce the appeal of holding non-yielding assets like bullion. Despite the marginal dip following Powell’s comments, gold prices still have support amid geopolitical tensions, de-dollarization and strong central bank buying. Analysts noted that gold prices may reach closer to the $3,000 level by March 2025.
Market focus now shifts to the U.S. payrolls report on Friday and inflation data for November due next week to gauge the outlook on interest rates.
Data on Tuesday revealed that U.S. job openings increased moderately in October while layoffs declined. A strong jobs report may push the Fed to take a more cautious approach when cutting rates. The strong U.S. labor market report comes as progress in lowering inflation to the 2 percent target seems to have stalled, suggesting that the central bank may pause its rate-cutting cycle next year.
U.S. central bankers cautious
U.S. central bankers this week signaled support for additional rate cuts. However, they remained concerned over inflation’s trajectory, particularly since President-elect Donald Trump’s re-election last month. St. Louis Fed President Alberto Musalem said that it may be appropriate to pause rate cuts this month since the risks of lowering borrowing costs too quickly are greater than those of easing too little.
Meanwhile, San Francisco Fed President Mary Daly said there is no sense of urgency to lower interest rates and that a lot more work needs to be done to deliver on the 2 percent inflation target and durable economic growth.
Read: Oil prices edge up amid U.S. inventory draw, OPEC+ meeting in view
Trade tensions rise
Gold prices remain supported amid rising trader bets that the Federal Reserve will cut rates again this month. Traders currently see a 77.5 percent chance of a 25-basis-point rate cut during the Fed’s next meeting in 13 days, according to the CME FedWatch Tool. However, investors remain concerned that Trump’s tariff plans could trigger inflation and global trade wars, which could impact the safe-haven appeal of gold.
U.S. President-elect Donald Trump pledged to impose big tariffs against America’s three biggest trading partners, Mexico, Canada, and China and also threatened a 100 percent tariff on ‘BRICS’ nations.
Other precious metals
The precious metals market saw positive movement on Thursday as gold prices dipped. Spot silver gained 0.01 percent to $31.29 while platinum gained 0.16 percent to $942.48 and palladium rose 0.09 percent to $978.75.
