Gold prices have inched upward, hovering close to their recent record highs on Monday, thanks to the weakened U.S. dollar. Attention is now turning to a crucial U.S. inflation report, which is scheduled for release later this week.
Spot gold experienced a modest increase of 0.1 percent, reaching $2,939.15 an ounce as of 04:44 GMT. The precious metal had achieved an all-time high of $2,954.69 just last Thursday. Meanwhile, U.S. gold futures showed little change, trading flat at $2,953.
In the previous week, U.S. President Donald Trump issued threats of new tariffs within the next month or sooner, adding lumber and forest products to previously announced duties on imported cars, semiconductors, and pharmaceuticals.
PCE report anticipation
Markets are now shifting their attention toward the Personal Consumption Expenditures (PCE) print, the Federal Reserve‘s preferred measure of inflation, set to be released on Friday. This report could provide more clarity regarding the central bank’s interest rate trajectory. If inflationary pressures compel the Fed to maintain higher rates, the appeal of gold as a non-yielding asset may diminish.
We uphold our optimistic price outlook and observe that silver has successfully kept pace with the recent surge in gold prices, amidst ongoing concerns regarding the impact of tariffs on metals traded at the COMEX Market in New York, remarked Olly Hansen, head of Commodity Strategy at Saxo Bank.Â
On the geopolitical front, Trump reversed his stance on Friday, acknowledging that Russia did indeed invade Ukraine, and indicated that Kyiv would soon finalize a minerals agreement with the U.S. as part of efforts to resolve the conflict.
Spot silver saw a gain of 0.4 percent, reaching $32.67 an ounce, while platinum rose by 0.5 percent to $974.10. In contrast, palladium experienced a slight decline of 0.2 percent, settling at $967.56.
Last week, we noted a narrowing gap between New York’s prices and those of London’s spot market. However, while gold traders can rely on the Bank of England for gold rentals as a last resort, silver lacks this option, rendering it more susceptible to market fluctuations. This situation underscores the persistent and supportive price gap in New York, highlighted Hansen.
Read more: UAE gold prices ease AED0.75, global rates hold near record high on U.S. tariff concerns
Gold prices declined on Friday but maintained upward momentum
Gold prices experienced a drop on Friday from the new record high achieved in the previous session. Nevertheless, they remain on track for their eighth consecutive weekly gain as fears surrounding U.S. President Donald Trump’s tariff threats have boosted safe-haven demand.
In the UAE, gold rates saw a downturn, with 24-carat gold decreasing by AED0.5 to AED353, and 22-carat gold falling by AED0.75 to AED328.25. Furthermore, 21-carat gold decreased by AED0.5 to AED314.75, while 18-carat gold ticked down by AED0.5 to AED269.75.
Globally, spot gold fell by 0.44 percent to $2,927.55 per ounce as of 5:42 GMT. Despite this decline, bullion has gained over 1 percent so far this week, having reached an all-time high of $2,954.69 on Thursday. Meanwhile, U.S. gold futures dipped by 0.39 percent to $2,942.31.
Numerous long-term factors influence commodity strength. Among the most significant are central banks’ demands to diversify away from the dollar, concerns surrounding financial debt, and geopolitical tensions. Following a steady rise since mid-December, gold could experience a correction of over $100 down to $2,818 without undermining the overall positive trend, said Hansen.
He noted that in the past week, we’ve witnessed a surge in demand for gold-backed ETFs, heading towards the largest weekly increase in holdings since 2023. This trend indicates that investors are increasingly willing to pay a premium for exposure to gold, anticipating a rise to approximately $3,000 or even higher. However, for this scenario to materialize, the market will need to keep a close eye on upcoming U.S. data and assess whether the recent weakness will persist, potentially leading to lower interest rates alongside a declining dollar, further explained Hansen.
U.S. dollar near lowest level since December 10
The U.S. dollar continues to linger near its lowest level since December 10, amid speculation regarding further interest rate cuts by the Federal Reserve. The dollar index rose by 0.11 percent to 106.49 on Friday. However, a weaker dollar enhances the attractiveness of bullion for holders of other currencies, thereby supporting gold prices this week.
In light of a weaker U.S. dollar, gold prices are also likely to benefit from strong physical market demand and persistent central bank purchases. Recently, Goldman Sachs revised its gold price forecast upward to $3,100 per ounce from $2,890 per ounce for the end of 2025, citing a structurally higher demand from central banks.
UBS has also updated its gold price forecast, projecting that the yellow metal could soar to over $3,200 before stabilizing at elevated levels in the coming years. This revision reflects an increase from their earlier peak prediction, with UBS emphasizing various factors that contribute to a more positive outlook.
