Gold prices eased on Friday as the dollar strengthened. However, they were on track for their third consecutive weekly gain as the Federal Reserve signaled rate cuts for this year, and safe-haven demand grew amid geopolitical and economic uncertainties.
In the UAE, gold rates declined AED0.5, with 24-carat gold falling to AED365 and 22-carat declining to AED338. In addition, 21-carat gold fell to AED324 and 18-carat gold ticked down to AED277.75.
Globally, spot gold lost 0.20 percent to $3,030.69, as of 6:09 GMT. Bullion recorded an all-time high of $3,057.21 per ounce on Thursday and has climbed about 1.5 percent so far this week. Meanwhile, U.S. gold futures dipped 0.17 percent to $3,038.52.
Limiting the recent rally in gold prices, the U.S. dollar index rose 0.23 percent to 104.09, making bullion less attractive for other currency holders. The greenback was supported by expectations that the Fed will leave interest rates unchanged in the near term amid heightened uncertainty over economic growth and Trump’s tariffs.
Fed to cut rates twice this year
On Wednesday, the Fed held its benchmark rate steady in the 4.25-4.50 percent range as widely expected. However, policymakers see the central bank delivering two 25-basis-point cuts by the end of the year. Non-yielding assets like gold tend to thrive in a low-interest-rate environment.
U.S. President Donald Trump’s initial policies, including extensive import tariffs, seem to have tilted the U.S. economy towards slower growth and at least temporarily higher inflation, Fed Chair Jerome Powell said after the policy meeting.
Powell added that “uncertainty around the (economic) outlook has increased,” adding that some tariff inflation has been passed on to consumers. Powell added, “Our current policy stance is well positioned to deal with the risk and uncertainties we face.”
Fed policymakers acknowledged that the jobs market remains solid but noted that prices remain high. Therefore, they emphasized they would monitor risks for both sides of the dual mandate. They also updated their projections about interest rates, economic growth, the unemployment rate and inflation. Policymakers now see two rate cuts in 2025, revising the economy downward, and projecting inflation to tick higher alongside the unemployment rate.
Mideast geopolitical risks emerge again
In addition to the Fed keeping interest rates steady and amid growing tariff uncertainty, tensions in the Middle East have resumed, further contributing to the recent surge in gold prices. Furthermore, hostilities between Russia and Ukraine continued despite talks to achieve a 30-day ceasefire from attacking energy facilities.
Several factors, including tariff uncertainty, rate cut expectations and the renewal of Middle Eastern tensions, have propelled gold prices to new heights this year, pushing them to 16 record highs, with four above the $3,000 mark.
Analysts noted that these factors will continue pushing gold prices upward, despite today’s decline. The non-yielding metal is considered a hedge against geopolitical and economic turbulence and thrives in a low interest-rate environment.
Read: Asian stock markets mixed after China central bank keeps rates steady
Other precious metals
As gold prices fell from their recent high, the precious metals market witnessed negative movement. Spot silver fell 1.2 percent to $33.13 an ounce, platinum lost 0.4 percent to $980.75, and palladium declined 0.6 percent to $946.01. All three metals were poised for weekly losses.
Among industrial metals, copper prices retreated 0.06 percent to $5.08 on Friday after rising sharply on speculation over tighter supplies due to Trump’s tariffs. Optimism over stimulus measures in top importer China also aided copper.
