Gold price trends declined on Friday following U.S. inflation data and dovish statements from a Federal Reserve official, fueling expectations of multiple interest rate cuts this year.
Gold Prices Decline
Spot gold experienced a dip of 0.19%, equivalent to $5.26, settling at $2,709.61 per ounce as of 5 PM PST. This marked a drop from the previous day’s close of $2,714.87 per ounce. Meanwhile, U.S. gold futures fell by 0.7%, reaching $2,732.00.
Factors Driving Gold’s Movement
According to Zain Vawda, a market analyst at MarketPulse by OANDA, “Gold found support this week due to weaker-than-expected U.S. economic data, including PPI and CPI figures, along with dovish remarks from Federal Reserve policymakers.” Persistent uncertainties surrounding 2025 also contributed to the metal’s appeal, he added.
Key Economic Indicators
Recent U.S. data released on Wednesday revealed softer-than-expected core inflation. This development strengthened bets on a Federal Reserve rate cut, with traders pricing in nearly equal chances of two cuts by year-end, according to a Reuters report.
Federal Reserve Governor Christopher Waller echoed this sentiment, suggesting three or four rate cuts could occur if the U.S. economy shows further signs of weakening.
Gold’s Role as an Inflation Hedge
Gold price trends is traditionally viewed as a hedge against inflation. Lower interest rates enhance gold’s attractiveness as it is a non-yielding asset.
As the inauguration of President-elect Donald Trump approaches, his economic policies remain under scrutiny. His proposed trade tariffs may drive inflation, which could, in turn, impact Federal Reserve rate decisions. ANZ analysts noted, “While upside risk to inflation raises the potential for shallower rate cuts, this also implies lower or steady real rates, benefiting gold investment.”
ANZ further stated they expect exchange-traded fund (ETF) flows to shift positive after three years of consecutive outflows.
Gold Market Trends Elsewhere
In India, gold discounts widened to their largest gap in six months. Rising domestic prices curbed demand, while jewelers awaited the announcement of the annual federal budget.
Meanwhile, silver dropped by 0.9%, settling at $30.49 per ounce. Palladium declined 0.5%, reaching $936.31, while platinum edged up 0.6% to $937.50, though it was on track for its worst weekly performance since November.
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