Gold prices surged to a near three-month high on Friday and were set to record their fourth consecutive weekly gain, supported by uncertainty surrounding U.S. President Donald Trump’s tariff plans and his calls to lower interest rates, weighing on the dollar.
In the UAE, gold rates recorded notable gains, with 24-carat gold rising AED3.5 to AED335.75 and 22-carat gold gaining AED3 to AED310.75. Meanwhile, 21-carat gold increased by AED3 to AED301 while 18-carat gold gained AED2.5 to AED258.
Globally, spot gold surged 0.75 percent to $2,777.35 per ounce, as of 6:13 GMT. Prices rose more than 2 percent so far this week, rising to their highest since October 31, when they hit a record high of $2,790.15. Meanwhile, U.S. gold futures gained 0.71 percent to $2,784.72.
Dollar falls over 1 percent this week
The U.S. dollar index fell 0.31 percent to 107.71, making bullion more attractive for other currency holders. The dollar lost over 1 percent this week, recording its worst weekly fall in two months. U.S. Treasury bond yields also edged lower in reaction to Trump’s comments, saying that he would rather not have to use tariffs on China.
The dollar started slipping after Trump refrained from implementing aggressive tariffs following his inauguration. This, along with the prospects for further policy easing by the Federal Reserve, dragged the U.S. dollar to a new monthly low, which benefited the non-yielding yellow metal.
Trump also called for an immediate decline in interest rates and provided no clarity on tariffs. The lack of clarity about his future policies has led market participants further toward safe-haven assets such as gold since it acts as a hedge against volatility, which further supported the recent surge in prices.
Traders see no chance of a rate cut next week
Rate decisions from the U.S. Federal Reserve and European Central Bank are scheduled for next week. Traders see almost no chance of a Fed rate cut next week, according to the CME Group’s FedWatch Tool. Higher rates dampen the appeal of the non-yielding bullion.
However, the market is still pricing in the possibility that the U.S. central bank will lower borrowing costs twice by the end of this year amid signs of inflationary pressures following Trump’s inauguration.
Trump said on Friday that his conversation with Chinese President Xi Jinping was friendly and that he could reach a trade deal with China and would rather not use tariffs. This eased worries that Trump’s protectionist policies could boost inflation and supported prospects for further policy easing by the Fed, further benefiting gold prices.
Trump had previously proposed tariffs of up to 10 percent on global imports, 60 percent on Chinese goods, and a 25 percent import tariff increase on Canadian and Mexican products. He also vowed to hit the European Union with tariffs and said his administration was discussing a 10 percent tariff on goods imported from China starting February 1.
Read: UAE gold prices dip AED1.25, global rates ease on stronger dollar
Bank of Japan raises rates to 17-year high
Elsewhere, the Bank of Japan raised interest rates to their highest since the 2008 global financial crisis. On Friday, the central bank raised its policy interest rate to 0.5 percent from 0.25 percent, its highest level in about 17 years. The Bank of Japan said it will continue to raise the key short-term rate if the economy and prices move in line with its expectations.
The bank also lifted its projections for the core consumer price index, excluding volatile fresh food, for the three years through fiscal 2026 in its latest outlook released the same day. The bank now estimates that the index will grow 2.7 percent in fiscal 2024, 2.4 percent in fiscal 2025 and 2.0 percent in fiscal 2026, compared with the previous forecasts of 2.5 percent, and 1.9 percent and 1.9 percent, respectively.
Other precious metals
As gold prices surged to near their record high, the precious metals market saw an overall uplift on Friday. Spot silver rose 1.13 percent to $30.79 per ounce, platinum gained 1.07 percent to $952.50 and palladium increased by 0.82 percent to $999.5.
