Gold prices rose to near a three-week high on Friday as the U.S. dollar index dipped, gaining safe-haven flows as the market awaits the release of U.S. economic data and President-elect Donald Trump’s proposed policy changes.
In the UAE, gold rates rose, with 24-carat gold gaining AED3 to AED322.5 and 22-carat gold increasing by AED2.75 to AED298.5. Additionally, 21-carat gold increased by AED2.75 to AED289 and 18-carat gold climbed by AED2.5 to AED247.75.
Globally, gold prices were set for a weekly rise with spot gold gaining 0.11 percent to $2,659.6. Bullion rose around 1.5 percent this week so far. Meanwhile, U.S. gold futures rose 0.23 percent to $2,675.01.
The U.S. dollar index fell 0.22 percent to 109.15, making bullion more attractive for other currency holders.
Trump to take office on January 20
As Trump gears up for his inauguration on January 20, some of his proposed policies like tariffs and protectionist policies are raising market concerns regarding inflation and trade wars. This has increased safe-haven flows, further supporting the rise in gold prices. If the dollar index continues to pull back, gold may see an additional rise.
The yellow metal surged by 27 percent in 2024, achieving its best annual performance since 2010, driven by the Fed’s significant rate cuts from the previous year and ongoing geopolitical tensions worldwide. Low interest rates reduce the opportunity cost of holding non-yielding assets like gold. Despite gold’s annual increase, the Federal Reserve’s December meeting impacted market sentiment, indicating only two interest rate cuts in 2025.
Dollar index climbs to multi-year high
The dollar index climbed to a new multi-year high of 109.56 on Thursday before easing slightly to trade around 109.15 today, which supported the rise in gold prices. The precious metal reached an all-time high of $2,790.15 on October 31 last year, fueled by major Fed rate easing, including a notable rate cut in September.
Geopolitical tensions have also been a major factor in gold’s surge in 2024 and are likely to continue to provide support in 2025, particularly with Trump’s administration taking office. Ongoing geopolitical risks related to the prolonged Russia-Ukraine conflict and persistent tensions in the Middle East are expected to boost gold prices in the coming year.
Central bank buying to rise in 2025
Record central bank purchases have bolstered the demand for gold. A World Gold Council survey suggests that major central banks will likely increase gold purchases in 2025, further boosting demand for the precious metal and supporting the rise in its prices.
On the economic front, the market is awaiting the release of several sets of economic data next week including the nonfarm payrolls report and minutes of the Federal Reserve’s meeting which will give traders additional insights into the monetary policy’s trajectory given that the Fed has lowered its forecast for rate cuts in 2025.
Read: Oil prices climb on hopes for Chinese stimulus with Brent at $72.68 and WTI at $76.08
Other precious metals
As gold prices rose to around a three-week high, spot silver fell 0.17 percent to $29.52 per ounce, platinum gained 0.09 percent to $923.71, and palladium rose 0.34 percent to $914.41. All three metals were on track for weekly gains.
Meanwhile, copper gained 0.29 percent to $4.00 as the increase in monthly Chinese factory activity provided support. According to Caixin PMI data released on Thursday, Chinese manufacturing activity grew in December, albeit at a slower-than-expected pace.
