Gold prices saw a modest increase on Friday and were on track for weekly gains as rising uncertainty regarding U.S. interest rates and trade tariffs boosted safe haven demand.
In the UAE, gold rates climbed by AED1.5, with 24-carat gold reaching AED323.5 and 22-carat gold advancing to AED299.5. Additionally, 21-carat gold increased to AED290.0, while 18-carat gold hit AED248.25.
However, the strength of the dollar, ahead of a significant labor market report expected later in the day, constrained any substantial rise in gold prices. This was further influenced by hawkish indications from the Federal Reserve. Spot gold edged up 0.1 percent to $2,672.12 per ounce, while February gold futures rose 0.2 percent to $2,695.74 per ounce by 23:58 ET (04:58 GMT). Spot prices were up about 1.5 percent for the week, driven by heightened economic uncertainty that spurred demand for the yellow metal.
Markets were anxious ahead of the December nonfarm payrolls data, set to be released later on Friday, which is anticipated to influence expectations for U.S. interest rates. Over the past year, payrolls data has consistently exceeded forecasts, reflecting ongoing resilience in the labor market. This trend provides the Fed with more flexibility to contemplate future rate cuts.
Read more: UAE gold prices dip AED0.25, global rates rise as focus shifts to U.S. jobs data
Markets on edge ahead of payroll data release
The minutes from the central bank‘s December meeting indicated that policymakers were cautious about further interest rate reductions due to persistent inflation and signs of labor market strength. Fed officials also expressed concerns about inflationary pressures stemming from protectionist and expansionary policies under President-elect Donald Trump, with uncertainty surrounding his plans expected to heighten as his inauguration approaches on January 20.
Other precious metals saw gains on Friday, with platinum futures rising 0.9 percent to $993.20 per ounce and silver futures up 0.5 percent to $31.160 per ounce by 00:12 ET (05:12 GMT).
Copper optimistic on China stimulus prospects
In the realm of industrial metals, copper prices continued to rise as disappointing economic indicators from leading importer China fueled speculation that Beijing would significantly ramp up its stimulus measures in 2025. Benchmark copper futures on the London Metal Exchange rose 0.5 percent to $9,123.50 per ton, while March copper futures also increased by 0.5 percent to $4.3355 per pound.
Weak inflation data from China released on Thursday ignited expectations that the government would be compelled to implement more stimulus, particularly fiscal measures aimed at boosting private consumption. The looming threat of increased U.S. trade tariffs is also likely to motivate Beijing to provide additional stimulus to safeguard the economy, which has been struggling with sluggish growth for several years.
As the world’s largest copper importer, China’s economic health significantly influences copper prices, with concerns about demand diminishing due to ongoing economic challenges.
Gold prices shift amid jobs report anticipation
Gold prices increased on Thursday after reaching a near four-week high in the previous session, as attention turned to the U.S. employment report scheduled for Friday, which could provide further insight into the Federal Reserve’s interest rate plans for the year. In the UAE, gold prices dipped by AED0.25, with 24-carat gold falling to AED322 and 22-carat gold decreasing to AED298. Meanwhile, 21-carat gold dropped to AED288.5, and 18-carat gold reached AED247.25.
Globally, spot gold rose 0.11 percent to $2,659.18 as of 6:11 GMT, while U.S. gold futures increased by 0.15 percent to $2,676.41. The U.S. dollar index remained steady at 109.09, nearing the two-year peak it reached last week, which affects the attractiveness of gold for investors holding other currencies.
Fed observations on labor market conditions
Recently, gold prices have remained within a narrow range due to a lack of new supportive factors. The precious metal reached a near four-week peak in the prior session following a weaker-than-expected private employment report from the U.S., which hinted that the Fed might adopt a less cautious stance regarding rate cuts this year. The Automatic Data Processing report indicated that private sector payrolls increased by 122,000 in December, significantly lower than November’s increase of 146,000 and below expectations of 140,000.
A separate report from the Labor Department revealed that initial jobless claims totaled 201,000 for the week ending January 4, marking the lowest level since February 2024 and signaling a stable labor market.
Furthermore, another report released on Tuesday showed an unexpected increase in U.S. job openings for November, although hiring slowed, indicating that the labor market is softening at a pace that does not necessitate immediate rate cuts from the Fed. The market now looks to the U.S. nonfarm payrolls report on Friday for additional insights into the Fed’s policy outlook for the year and its implications for gold prices. Gold is traditionally viewed as a hedge against inflation; however, rising interest rates diminish the appeal of this non-yielding asset.
Minutes from the Fed’s December FOMC meeting indicated that policymakers perceived labor market conditions as gradually easing and favored a slower approach to rate cuts in light of stagnant disinflation. They also acknowledged potential impacts from shifts in trade and immigration policies, suggesting that the process of lowering inflation could take longer than initially anticipated.
