Gold prices retreat from recent highs amid Fed rate uncertainty

Economic data and Fed policy minutes shape investor sentiment in precious metals market
Gold prices retreat from recent highs amid Fed rate uncertainty
Geopolitical risks continued to support the metal's safe-haven status

Gold prices retreated from a near two-week high on Friday as upbeat U.S. economic data signaled a robust economy. The release of favorable economic data contributed to a shift in investor sentiment, prompting some to reassess their positions in the precious metal market.

By 06:43 GMT, spot gold declined 0.24 percent to $2,019.51 per ounce after reaching its highest level of $2034.69 since February 9 earlier in the session. Meanwhile, U.S. gold futures dipped 0.16 percent to $2,027.50 per ounce.

In Dubai, 24-carat gold was priced at AED 245.50 per gram, while 22-carat stood at AED 227.25 per gram.

Fed policy speculation

Investors closely watched economic data for clues about the U.S. Federal Reserve‘s stance on interest rates and its impact on gold prices. The unexpected decline in jobless claims suggested ongoing strength in the labor market. This prompted speculation about the Fed’s future policy decisions. Moreover, minutes from the Fed’s latest policy meeting, released on Wednesday, revealed that most policymakers are cautious about the risks associated with premature interest rate cuts. This uncertainty surrounding monetary policy further influenced gold prices and market dynamics.

Geopolitical tensions

Despite the retreat in gold prices, geopolitical risks continued to support the metal’s safe-haven status. The intensification of conflicts underscored geopolitical instability, driving demand for assets perceived as safe havens. Moreover, technical charts indicated a strong support level for gold prices around the $2000 mark, reinforcing its appeal as a hedge against uncertainty.

Rally in gold prices

Analysts remained optimistic about the outlook of gold despite short-term fluctuations. Some noted potential downside risks in the short term if economic data continues to improve and inflation remains stable. Meanwhile, others highlighted expectations for a notable rally in gold prices in the second quarter of the year, emphasizing the market’s underestimation of the possibility of a Fed-cutting cycle.

Read: How to invest in Saudi share market in 2024

Other precious metals

While gold prices experienced a slight decline, other precious metals displayed mixed performance. Spot platinum increased 1.9 percent, recording $899.60 an ounce. Meanwhile, palladium rose 2 percent to $968.40 and silver lost 0.3 percent, recording $22.80.

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