Gold prices dipped more than 1% on Friday, as the dollar firmed and some investors locked in profits following the metal’s recent surge on increasing expectations of U.S. interest rate cuts in September.
Spot gold was down 1.7% at $2,404.34 per ounce by 1233 GMT. Bullion hit an all-time high of $2,483.60 on Wednesday.
U.S. gold futures fell 2% to $2,406.50.
The U.S. dollar inched 0.1% higher, while benchmark 10-year Treasury yields also rose, putting pressure on bullion. [USD/] [US/]
“It appears to be a combination of factors, including a stronger U.S. dollar, rising U.S. yields, easing geopolitical tensions, and potential profit-taking, all contributing to gold’s weakness ahead of the weekend,” said Zain Vawda, market analyst at MarketPulse by OANDA. “If prices close below $2400 today, reaching $2500 in the near-term could prove challenging.” Markets see a 98% chance of a rate cut by the U.S. Federal Reserve in September, according to the CME FedWatch Tool. Non-yielding bullion’s appeal tends to shine in a low-interest rate environment. Earlier this week, Fed Chair Jerome Powell said recent inflation readings “add somewhat to confidence” that the pace of price increases is returning to the central bank’s target in a sustainable fashion.
“In the near term, I expect gold to remain supported above $2,400,” said Ricardo Evangelista, senior analyst at ActivTrades.
If U.S. GDP data due next week shows a slowdown in economic activity, gold could return to or hover around the record high it hit on Wednesday, Evangelista added.
Another factor that could influence gold is traders’ belief U.S. presidential candidate Donald Trump will win the November polls, and the more protectionist global affairs and trade stance that could come with that, according to Evangelista.
“This is very positive for the dollar and it affects gold, of course,” he said.
Spot silver fell 3.5% to $29.00 per ounce and platinum eased 0.8% to $960.10, while palladium lost 1.1% to $919.51. All three metals were headed for weekly declines.