Gold prices are poised for a third consecutive weekly gain, despite facing some pressure from a stronger U.S. dollar on Friday. The market’s focus is shifting towards the inauguration of President Donald Trump, with uncertainties surrounding his policies contributing to renewed demand for bullion.
Key Highlights:
Current Prices:
Spot gold (XAU) dipped 0.4% to $2,701.03 per ounce by 03:10 p.m. ET.
U.S. gold futures (GCcv1) settled 0.1% lower at $2,748.70.
Market Analysis:
According to David Meger, director of metals trading at High Ridge Futures, the pullback in gold prices is primarily a profit-taking move rather than a significant decline, influenced by a slight uptick in the dollar.
Gold reached a one-month high on Thursday, just $65.6 shy of its all-time high of $2,790.15 from October.
Weekly Performance:
Gold prices have gained 0.5% this week, marking their third straight weekly increase, driven by softer-than-expected U.S. core inflation figures which have intensified speculation regarding potential rate cuts by the Federal Reserve.
Interest Rate Expectations:
Traders are anticipating two rate cuts by the end of the year, as Fed Governor Christopher Waller indicated that further cuts could occur if economic data continues to weaken.
Impact of Trump’s Policies:
Markets are closely monitoring Trump’s inauguration on January 20, as his proposed trade tariffs could escalate inflation and ignite trade wars, enhancing gold’s appeal as a safe-haven asset.
Meger noted that the uncertainty surrounding Trump’s policies has been a supportive factor for gold prices.
Investor Sentiment:
Non-yielding gold is often viewed as a hedge against inflation and political uncertainty, making it more attractive in a lower interest rate environment.
Nitesh Shah, a commodity strategist at WisdomTree, highlighted that many investors are turning to gold to mitigate potential downside risks associated with new policies that could negatively impact economic growth.
Other Precious Metals:
Spot silver (XAG) fell 2% to $30.17 per ounce.
Palladium (XPD) rose 1% to $949.99, while platinum (XPT) increased by 0.9% to $940.28.