Gold prices edged down on Friday and were set for their worst week in over three years as the dollar continued to strengthen amid expectations of fewer Federal Reserve rate cuts.
In the UAE, gold rates recovered some losses, with 24-carat gold gaining AED1.75 to AED310.75 and 22-carat gold rising to AED287.75. Meanwhile, 21-carat gold rose AED1.5 to AED278.50 and 18-carat gold reached AED238.75.
Globally, spot gold was down 0.47 percent to $2,556.39 per ounce, as of 6:29GMT, falling more than 4 percent so far in the week. Bullion hit a two-month low in the previous session and has declined more than $220 from the record high of last month. Gold prices hit an all-time high of $2,790.15 in late October. Meanwhile, U.S. gold futures fell 0.40 percent to $2,562.50.
Stronger dollar impacts bullion’s appeal
The U.S. dollar maintained its upward trajectory this week after Donald Trump’s election win, pushing gold prices higher for holders of other currencies. The recent dip in gold prices signals expectations for a tighter U.S. monetary policy under Trump in 2025. Higher interest rates make holding gold less appealing due to the higher opportunity cost.
On Thursday, Fed chair Jerome Powell noted that steady economic growth, a robust job market, and ongoing inflation warrant a careful approach to rate cuts. According to the CME FedWatch tool, traders are pricing a 58.9 percent chance of a 25-basis point rate cut by the Fed in December, down from 83 percent a day ago.
U.S. data signals slower rate cut easing
Data on Thursday showed that U.S. producer prices picked up in October, adding to signs that progress toward lower inflation was stalling. The U.S. Producer Price Index rose 2.4 percent annually in October, compared to a 1.9 percent rise in September, according to the U.S. Bureau of Labor Statistics. This figure came in above the market expectation of 2.3 percent.
Meanwhile, the U.S. weekly initial jobless claims for the week ending November 9 increased to 217,000 from the previous week of 221,000, below estimates of 223,000.
Investors now await U.S. retail sales data, due at 13:30 GMT, and comments from several Fed officials later in the day, to gauge the health of the economy and its impact on gold prices.
Richmond Fed president Thomas Barkin stated on Thursday that while the Fed has made strong progress so far, there’s still more work to be done to keep the momentum going. St. Louis Fed president Alberto Musalem expects inflation to gradually decline while Dallas Fed president Lorie Logan warned against excessive easing that could reignite inflationary pressures.
In his comments, Minneapolis Fed president Neel Kashkari signaled uncertainty over interest rates, stating that any increases in inflation could see the Fed pause its rate-cutting spree.
Gold’s outlook positive
Analysts noted that while Powell’s comments could cap gains for gold ahead of the new year, another turbulent term for President-elect Trump could also see it attract safe-haven flows. With a quiet U.S. calendar next week, gold prices could rebound, potentially retesting the $2,600 level, added other analysts.
In addition, escalating tensions in the Middle East and the ongoing conflict between Ukraine and Russia could boost gold prices, a traditional safe-haven asset.
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Other precious metals
Amid the persistent decline in gold prices, the precious metals market witnessed mixed movement. Spot silver fell 0.43 percent to $30.33 while platinum gained a marginal 0.02 percent to $939.85 and palladium rose 0.46 percent to $945.60.
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