Gold prices resilience was evident on Friday as the market steadied despite ending the week with significant declines. The ongoing high U.S. interest rates and waning hopes for rate cuts influenced this resilience.
Spot gold edged up 0.2% to $2,332.77 an ounce, while gold futures dipped slightly by 0.1% to $2,333.85. Despite this modest increase, the metal's value is down 3.4% for the week from earlier record highs. This decline was mainly due to the fading safe haven demand and no escalated tensions in the Middle East, contrary to expectations.
The Federal Reserve's hawkish outlook continues to impact the market. Officials have raised concerns over persistent inflation and some remain open to additional rate increases. Although further hikes seem unlikely, traders have adjusted their expectations, now seeing almost equal chances for a rate hold or cut by September.
Gold prices resilience faces challenges as high rates for longer are detrimental to the yellow metal. It raises the investment cost of holding the non-yielding asset. Other precious metals like platinum and silver also steadied but are heading for weekly losses. Copper showed some recovery after a sharp drop from record highs, driven by a speculative frenzy that is now cooling off amid mixed signals from China, the world's top copper importer.
Explore how gold prices show resilience amid high U.S. interest rates and fading rate cut hopes, facing weekly declines
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