Gold prices experienced a significant uptick on Friday, climbing over 1% and nearing their all-time high from October. This surge is attributed to a weakening U.S. dollar amid President Donald Trump’s calls for lower interest rates and ongoing tariff uncertainties.
Key Highlights:
Current Gold Prices:
Spot gold (XAU) rose by 0.7%, reaching $2,772.79 per ounce by 1:42 p.m. ET, and has gained 2.7% throughout the week.
U.S. gold futures (GCcv1) settled at $2,778.90 per ounce, up 0.5%.
Proximity to Record High:
Gold is now just $17.3 away from its record peak of $2,790.15, which was reached on October 31.
Factors Driving Gold Prices:
Bart Melek, head of commodity strategies at TD Securities, noted that the decline in the U.S. dollar is a significant factor, influenced by Trump’s discussions around tariffs.
There is a perception in the gold market of rising inflation and a potentially more accommodative stance from central banks.
Economic Climate:
In the current environment of uncertainty, gold continues to be viewed as a reliable hedge against inflation and economic instability, especially in a low-interest-rate landscape.
During the World Economic Forum, Trump advocated for an immediate reduction in interest rates, contributing to the dollar hitting an over one-month low, which makes gold more affordable for international buyers.
Upcoming Trade Policy Announcements:
Attention is shifting towards potential tariff announcements on February 1, with Trump indicating that tariffs could be imposed on Mexico, Canada, China, and the European Union.
Analysts from Standard Chartered highlighted that the focus has moved away from the January 29 Fed meeting concerning trade policy.
Market Reactions:
A short-covering rally has propelled spot gold prices upward, although ETF flows remain inconsistent ahead of the Fed meeting.
Traders generally expect the Fed to maintain current interest rates during the upcoming meeting.
Other Precious Metals:
Spot silver (XAG) rose 0.8% to $30.67 per ounce.
Platinum (XPT) increased 0.6% to $948 per ounce.
Palladium (XPD) gained 0.1% to $992.75, marking its highest level since November 25.