Gold prices rose on Friday, hovering near their record high, and were set for a sixth consecutive weekly gain as trade war concerns boosted safe-haven demand ahead of the key U.S. payrolls report.
In the UAE, gold rates rose, with 24-carat gold and 22-carat gold gaining AED1.25 to AED345.5 and AED321.5, respectively. Meanwhile, 21-carat gold rose by AED1.25 to AED308.25 and 18-carat gold increased by AED1 to AED264.25.
Globally, spot gold gained 0.55 percent to $2,866.28 per ounce, as of 5:09 GMT, and has gained more than 2 percent this week. Gold hit an all-time high of $2,882.16 on Wednesday. Meanwhile, U.S. gold futures rose 0.42 percent to $2,888.92.
Trade war uncertainty
Earlier this week, the World Trade Organization said China initiated a dispute over the U.S. tariffs. China also announced tariffs on some U.S. goods in retaliation to President Donald Trump’s 10 percent levy on Chinese imports. This marked a new trade war between the world’s top two economies, which continued to raise safe-haven demand for gold and further supported the surge in prices.
The Trump administration’s tariff plans come with inflation risks, three Federal Reserve officials warned on Monday, with one arguing that uncertainty over the outlook for prices calls for slower interest rate cuts than otherwise.
With the current U.S. administration creating market uncertainty, and central bank buying showing no signs of slowing down any time soon, gold prices are very likely to exceed $3,000 this year.
U.S. employment report in focus
Focus now shifts to the U.S. employment report, due at 13:30 GMT, which investors will scan for any clues on the U.S. interest rate cycle.
A full-employment economy with solid growth and low inflation will let the Federal Reserve continue cutting rates. However, uncertainty about the impact of the new tariffs and other policy changes argues for a slower approach, said Chicago Federal Reserve President Austan Goolsbee on Thursday.
Meanwhile, Dallas Fed President Lorie Logan said that inflation progress has been significant, but the U.S. labor market remains far too firm to push the central bank into rate cuts any time soon.
The U.S. Department of Labor reported on Thursday that the number of citizens filing new applications for unemployment insurance rose to 219,000 for the week ending February 1, from the previous week’s revised 208,000.
Gold is traditionally a safe investment during economic and geopolitical turmoil, but higher interest rates reduce the non-yielding asset’s appeal.
U.S. Treasury Secretary Scott Bessent said on Thursday that the Trump administration was not particularly concerned about the Federal Reserve’s trajectory on interest rates and that it is focusing on bringing down 10-year Treasury yields. The yield on the benchmark 10-year U.S. government bond fell to its lowest level since December 12 earlier this week amid bets that the Fed will cut rates twice by the end of 2025, further benefitting gold prices.
Read| Gold demand surges YoY to record $382 billion, global investment up by 25 percent: Report
Other precious metals
As gold prices rose, the precious metals market saw mixed movement on Friday. Spot silver climbed 0.12 percent to $32.24 per ounce and platinum gained 0.08 percent to $986.31. However, palladium fell 0.24 percent to $976.25. Both silver and platinum were seen rising this week, while palladium was headed for a weekly loss.
