Gold prices witnessed a slight uptick on Friday following a drop in consumer spending and a loss of over 1 percent during the week. However, unexpected spikes in U.S. consumer prices and a shift in sentiment among traders regarding potential rate cuts reflect a cautious market outlook.
Spot gold witnessed a slight 0.08 percent increase recording $2,004.48 per ounce, as of 07:20 GMT. Meanwhile, U.S. gold futures saw a 0.07 percent increase recording $2,016.30 per ounce.
Economic indicators
Traders recalibrated their expectations for interest rate cuts after recent economic data contradicted earlier trends. The unexpected surge in U.S. consumer prices prompted concerns about inflationary pressures and influenced the dynamics of gold prices. This led investors to reassess the likelihood of monetary policy easing by the Federal Reserve.
Moreover, data released during the week highlighted ongoing inflationary pressures in the U.S. economy. Both import prices and consumer prices rose more than expected in January, underscoring concerns about rising inflation.
The upcoming release of the U.S. producer price index (PPI) could provide further insight into inflationary trends, potentially influencing gold prices in the near term.
Market dynamics
Market analysts pointed to several factors contributing to the fluctuation of gold prices. The absence of a “war premium”, coupled with withdrawals from gold ETF holdings and a hawkish tone from Fed officials are some reasons for caution among investors. Analysts suggested that gold prices may decline, with the possibility of touching lower support levels.
Read: Oil prices stall amid slowing demand forecasts, regional tensions
Precious metals
In addition to gold prices, other precious metals experienced mixed performance during the week. Spot platinum fell 0.7 percent to $892.04 per ounce. Meanwhile, palladium dropped 1.5 percent to $938.55, while silver edged 0.1 percent higher to $22.93.
The divergent movements reflect broader market dynamics and investor preferences amidst evolving economic conditions and geopolitical uncertainties.
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