Gold edged slightly higher on Friday, marking its worst week in over three years, as a stronger US dollar and expectations of fewer Federal Reserve rate cuts weighed on the precious metal. According to the Dubai Jewellery Group, the 24K variant of gold increased by Dh1.75 per gram to Dh310.75, up from Dh309 per gram at Thursday's market close. Meanwhile, the 22K, 21K, and 18K variants saw declines, settling at Dh287.75, Dh278.50, and Dh238.75 per gram, respectively.
Globally, spot gold was down 0.1% at $2,562.61 per ounce as of 9.54am UAE time, having fallen over 4% during the week. The metal hit a two-month low in the previous session and has dropped more than $220 from its record high last month. The US dollar's continued surge following Donald Trump's election victory has made gold more expensive for holders of other currencies.
Gold's decline mirrors expectations of a more restrictive US monetary policy in 2025 under Trump, according to Fawad Razaqzada, a market analyst at Forex.com. Higher interest rates increase the opportunity cost of holding gold. Fed Chair Jerome Powell noted on Thursday that steady economic growth, a robust job market, and persistent inflation justify a cautious approach to rate cuts.
The CME Fedwatch tool indicates a 59% chance of a 25-basis-point rate cut in December, down from 83% a day earlier. "While Powell's comments may limit gold's gains as we enter the new year, another tumultuous term for President Trump could attract safe-haven flows to gold," said Matt Simpson, senior analyst at City Index. With a quiet US calendar next week, gold could rebound, potentially retesting the $2,600 level, according to Simpson. Data on Thursday revealed that U.S. producer prices rose in October, suggesting that progress towards lower inflation may be stalling.
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