Gold prices surged on Friday, poised for a weekly gain, propelled by a softer dollar and dwindling hopes of imminent interest rate cuts by the US Federal Reserve. The precious metal also benefited from safe-haven demand amidst escalating tensions in the Middle East, further bolstering its appeal to investors seeking refuge from market uncertainties.
As of 11:35 ET (1635 GMT), spot gold climbed 0.6% to reach $2,036.39 per ounce, on track for a robust 1.1% weekly rise. Similarly, US gold futures saw a 0.6% uptick, reaching $2,043.4 per ounce.
The dollar index, after nearly two months of gains, was poised for its first weekly decline, while US Treasury yields also retreated for the week. This decline in the greenback made bullion, priced in dollars, more attractive to overseas buyers.
Bob Haberkorn, senior market strategist at RJO Futures, attributed the surge in gold prices primarily to the weakening US dollar. He noted, “It’s a delicate walk right now in the precious metals market, but there is a lot of safe-haven buying despite the rates being as high as they are.”
Federal Reserve Governor Christopher Waller’s recent remarks, expressing a lack of urgency in implementing rate cuts, further dampened expectations of monetary policy easing before June. This stance was reinforced by the Fed’s minutes from its last meeting, which revealed policymakers’ concerns about the risks associated with premature rate cuts. Additionally, stronger-than-expected US consumer and producer prices underscored the central bank’s hesitancy to implement rate adjustments, thereby boosting gold’s allure as lower interest rates enhance its appeal as a non-yielding asset.
Giovanni Staunovo, an analyst at UBS, highlighted the impact of more hawkish comments from Fed officials, noting their modest drag on gold prices.
Meanwhile, amidst a surge in interest in bitcoin exchange-traded funds (ETFs), investors are increasingly shifting their holdings from gold-backed ETFs to digital assets, further influencing gold’s price dynamics.
In the wider precious metals market, spot platinum edged up by 0.1% to $902.50, while palladium surged by 2% to $986.89. Silver also saw gains, rising by 0.7% to $22.91, despite a 2.1% weekly decline.
As geopolitical tensions persist and market uncertainties linger, gold’s status as a safe-haven asset continues to underpin its resilience and attractiveness to investors, signaling a potential continuation of its upward trajectory in the near term.