Gold prices experienced on Friday a sharp decline, influenced by a combination of profit-taking and speculation around a potential second term for former U.S. President Donald Trump. The strengthening of the U.S. dollar, driven by unexpectedly robust jobless claims data, also contributed to the gold price drop.
In the UAE, gold prices fell with 24-carat gold inching up to AED293.50 per gram, while 22-carat gold fell to AED271.75. 21-carat gold also fell AED263.25 while 18-carat gold reached AED225.50.
Globally, spot gold fell 0.9 percent to $2,423.89 per ounce, while gold futures expiring in August declined 1.2 percent to $2,426.45 per ounce. The prices were now trading around $50 below the record high set earlier this week, as some investors took profits after a strong rally over the past seven days.
Interest rate cut expectations
The initial strength in gold was largely attributed to growing optimism surrounding interest rate cuts by the U.S. Federal Reserve, with traders pricing in a over 90 percent chance of a 25-basis-point reduction in September. However, the dollar found support this week from the better-than-expected jobless claims data, suggesting the labor market remained resilient, a key consideration for the Fed’s decision on rate cuts.
Trump’s political prospects
Furthermore, speculation over a second term for former President Trump, following a surge in his popularity after a failed assassination attempt, also benefited the dollar. Traders anticipate that Trump’s protectionist policies could lead to more capital being directed back into the United States.
Other precious metals decline
Other precious metals, including platinum and silver, also declined, tracking the drop in gold prices.
In the industrial metals market, copper prices steadied on Friday, but were nursing steep losses accumulated earlier in the week. This was largely due to growing uncertainty surrounding China, the top importer of copper.
Copper price fluctuations
Benchmark copper futures on the London Metal Exchange rose 0.3 percent to $9,411.0 per tonne, while one-month copper futures increased by the same margin to $4.280 per pound. However, both contracts were down between 4.7 percent and 7 percent for the week.
Read more: UAE gold prices inch up, global rates rise on rate cut hopes
Factors affecting copper prices
The initial losses in copper were sparked by weaker-than-expected Chinese economic growth data for the second quarter. Reports of the U.S. considering stricter trade restrictions against China, as well as speculation about a second term for former President Trump, also dampened sentiment towards the country.
Additionally, the lack of clear signals on further stimulus measures from China during the Chinese Communist Party’s Third Plenum earlier in the week contributed to the copper price decline.
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