Gold prices saw a modest decline on Friday as the U.S. dollar strengthened by 0.11 percent and Treasury yields declined. Traders raised their hopes for a possible interest rate cut before the end of the year due to slower-than-expected economic growth in the first quarter of 2024.
In the UAE, gold prices gained AED1 with 24-carat gold rising to AED283.75 per gram, while 22-carat gold increased to AED262.75. Twenty-one-carat gold inched up to AED254.25, while 18-carat gold reached AED218.
Globally, spot gold saw a modest 0.01 percent decline to $2,343.61 per ounce, as of 5:25 GMT. Despite the recent price declines, gold has gained 1.74 percent this month. Meanwhile, U.S. gold futures saw a 0.09 percent decline to $2,364.40.
U.S. economy slows
The U.S. Department of Commerce reported on Thursday that the U.S. economy grew 1.3 percent in Q1 of 2024, down from estimates of 1.6 percent and significantly slower than 3.4 percent in Q4 of 2023. Inflation in Q1 was also revised to 3.3 percent from 3.4 percent, keeping the Federal Reserve on track to possibly cut interest rates at least once before the end of the year. Gold is traditionally an inflation hedge. However, higher rates increase the opportunity cost of holding non-yielding assets, thus impacting their prices.
Dallas Federal Reserve president Lorie Logan expressed her concerns about upside risks to inflation despite recent easing, warning the central bank to remain flexible and keep its options open as it awaits more data on the health of the economy, which impacted trader sentiment amid the decline in gold prices. Meanwhile, Chicago Fed president Austan Goolsbee said on Thursday that housing inflation remains a key sticking point in price growth and that the U.S. labor market remains strong.
In light of the decline in gold prices, traders now await the release of the U.S. core personal consumption expenditures (PCE) price index data on Friday, which is the Federal Reserve’s measure of inflation for more insights into the trajectory of rate cuts.
Other precious metals
In line with the decline in gold prices, the precious metals market also saw a decline. Spot silver saw a 0.12 percent fall to $31.14 per ounce. Platinum dipped 0.10 percent to $1,023.20, while palladium fell 0.29 percent to $945.02.
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