International gold steady but faces worst weekly drop in over three years

WEB DESK: Gold prices held steady on Friday but the precious metal was on track for its worst week in over three years, mainly due to a stronger US dollar and expectations of fewer interest rate cuts from the Federal Reserve.

As of 0308 GMT, spot gold rose 0.1 per cent to $2,569.69 per ounce, following five consecutive days of losses. So far this week, gold has dropped over 4 per cent. The metal also hit a two-month low in the previous session, losing more than $220 from its record high last month.

The US dollar has been climbing steadily since Donald Trump’s election win, making gold more expensive for buyers using other currencies. Analysts like Fawad Razaqzada from Forex.com believe weakness in gold reflects market expectations of tighter US monetary policy under Trump’s leadership in 2025.

Higher interest rates reduce appeal of gold because they increase cost of holding non-yielding assets like bullion. Fed Chair Jerome Powell noted on Thursday that the US economy’s steady growth, strong job market and ongoing inflation mean the central bank is likely to be cautious about cutting rates quickly.

According to the CME Fedwatch tool, markets now see a 59 per cent chance of a 25-basis-point rate cut in December, down from 83 per cent just the day before.

Matt Simpson was of the view that while Powell’s comments might limit gold gains as 2025 approaches, uncertainty around Trump’s next term might drive demand for the precious metal. He added that with light US economic calendar next week, gold might bounce back.

On Thursday, data showed US producer prices rose in October, indicating progress in reducing inflation may be slowing. Investors are waiting for US retail sales data and comments from several Fed officials later in the day.

Other metals saw slight gains, with spot silver up 0.2 per cent to $30.52 per ounce, platinum rising 0.1 per cent to $940.68 and palladium adding 0.5 per cent to $946.00. However, all three were still on track for weekly declines.

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