Market focus shifts to US core personal consumption expenditure price index data to be released later today
Gold prices fell on Friday, hitting a record high in pre-session trading as traders awaited key inflation reports for future direction as expectations grew that the US would make another big rate cut later this year. After hitting a record high, the stock is expected to rise in the coming week.
In the UAE, gold prices stabilized with a slight increase of AED 0.25 for 22 carat and 18 carat gold varieties. 24 karat gold stabilized at 322.25 dirhams, while 22 karat gold rose to 299.50 dirhams. Meanwhile, 21-carat gold was unchanged at Dh289.75, while 18-carat gold rose to Dh248.50.
Globally, spot gold was down 0.34% at $2,663.47 at 5:40 GMT, after hitting a record high of $2,682.88 in the previous session. Meanwhile, US gold futures fell 0.35% to $2,685.40.
The dollar index rose 0.34% to 100.86, putting downward pressure on gold prices.
US labor market shows signs of recovery
Gold prices were poised for weekly gains on reports suggesting a recovery in the domestic labor market amid fears of a drop in weekly U.S. unemployment claims. Data on Thursday showed weekly U.S. jobless claims fell by 4,000 to 218,000, a four-month low.
The U.S. Federal Reserve decided to cut interest rates by 50 basis points (bp) at its last policy meeting, and traders are now predicting another 0.5 percentage point cut in November, according to the CME FedWatch tool. We estimate that there is a 51% chance that this will take place. Lower interest rates reduce the opportunity cost of holding non-yielding assets such as gold, especially given economic and political turmoil.
Market focus now shifts to Core Personal Consumption Expenditures Price Index data, the Fed’s preferred measure of inflation, to be released later in the day.
China’s gold imports plummet
Elsewhere, China’s net gold imports through Hong Kong fell 76% in August, the lowest in more than two years, data on Thursday showed. The People’s Bank of China also lowered interest rates and injected liquidity into the banking system on Friday, aiming to boost economic growth towards its 5% target.
Read: Oil prices fall as Libya and OPEC+ increase production, China stimulus provides support
Other precious metals
The precious metals market has been trending lower as gold prices retreat from their all-time highs. Spot silver fell 0.13% to $31.98, after hitting a nearly 12-year high of $32.71 in the previous session. Meanwhile, platinum fell 0.13% to $1,006 and palladium fell 0.99% to $1,037.25.
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