Gold prices saw a slight increase on Friday ahead of a key U.S. inflation report but were on track for their first weekly drop in six weeks as tensions in the Middle East eased.
In Saudi Arabia, 24-carat gold saw a 0.91 percent increase to SAR283.47 per gram and SAR8,816.75 per ounce.
Globally, spot gold saw a 0.26 percent increase to $2,338.5 per ounce, as of 7:23 GMT. Meanwhile, U.S. gold futures saw a 0.60 percent increase to $2,356.50. Despite the increase, gold prices were down around 2.3 percent, their biggest weekly drop since early December after Middle East tensions eased. Moreover, prices saw nearly a $100 decline from their all-time high of $2,431.29 on April 12.
U.S. economic data
The recent downward trend in gold prices reflects market sensitivity to expectations surrounding potential interest rate cuts, particularly after recent U.S. economic data revealed a significant slowdown in growth coupled with persistent inflationary pressures. The increase in inflation has led Federal Reserve members to take a cautious stance on interest rate cuts, stating that there was no urgency to decrease them. Markets now expect the first rate cut to occur in September. Higher interest rates reduce the appeal of holding non-yielding assets like gold.
Focus shifts to U.S. inflation data
Investor focus now turns to March’s core personal consumption expenditures (PCE) index data on Friday. The PCE index is the Fed’s preferred measure of inflation, and any significant acceleration in the numbers could influence expectations regarding the timing and extent of future interest rate adjustments. Analysts anticipate that a notable increase in the PCE figures could reinforce expectations for only one rate cut from the Fed this year, likely placing downward pressure on gold prices.
The dollar index was on track for its largest weekly decline since early March, making gold priced in greenback less expensive for holders of other currencies. This weakening of the dollar contributed to the resilience of gold prices despite broader market uncertainties.
Read: Saudi Arabia gold prices decline, global rates recover as markets await key U.S. economic data
Other precious metals
In addition to the increase in gold prices, spot silver rose 0.77 percent to $27.65 per ounce, while spot platinum and palladium also saw gains, rising 0.95 percent to $922.87 and 1.35 percent to $987.38, respectively.
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