Gold prices moved back above the $2,700 an ounce mark on Friday as increased safe-haven demand boosted sentiments.
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Prices soared Friday to near their highest level in a month due to uncertainty over U.S. interest rates and tariffs imposed by U.S. President-elect Donald Trump.
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Gold bulls have largely ignored the strength of the dollar index.
A stronger dollar makes dollar-denominated commodities more expensive for foreign buyers, limiting demand.
At the time of writing, the February gold contract on the COMEX was at $2,703.59 per ounce, up 0.5% from the previous close.
Silver futures on the COMEX also rose to $31.122 an ounce, up 0.4% from Thursday’s close.
According to experts, gold and silver both rose this week due to the increased inflow of safe-haven capital.
Trade concerns boost demand
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Spot gold prices were up almost 2% from last week’s close.
The markets were on alert awaiting the publication of the report on the evolution of non-farm employment in the United States, scheduled for later Friday.
This data would give the market more guidance on the Federal Reserve’s interest rate cut trajectory in the coming months.
Uncertainty over Trump’s tariffs also spurred some demand for safe haven in the dollar.
Gold and the dollar are “showing strength at the same time as they are sought after as safe-haven investments in the face of an uncertain global political situation,” said Barbara Lambrecht, a commodities analyst at Commerzbank.
This is currently the case, although some of the global uncertainty comes from the United States and the president-elect himself.
“The inauguration of Donald Trump on January 20 is unlikely to change this, at least in the short term, which is why gold should remain supported,” she added.
Focus on the Fed
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-Minutes from the latest US Federal Reserve meeting showed policymakers were cautious about further cutting interest rates.
This caution was due to a resilient economy and persistent inflation in the United States.
The job market also remained relatively stable in the United States.
New US economic data later on Friday could provide some guidance on the price of gold.
Fed officials were also seen expressing some concerns about inflationary pressures from Trump’s protectionist and expansionist policies.
Uncertainty over his plans is expected to increase before his inauguration on January 20.
Trump’s plans are expected to fuel higher inflation, which would then prompt the Fed to slow its monetary easing.
Rising interest rates reduce the attractiveness of non-yielding metals such as gold and silver.
Global Gold ETFs
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According to data from the World Gold Council (WGC), gold ETFs saw outflows of 6.8 tonnes last year.
The outflows are therefore significantly lower than the 85 tonnes reported by Bloomberg, because the WGC takes into account a larger number of ETFs, according to Commerzbank.
While the price of gold rose sharply at the same time, the value of assets held by ETFs (AUM) increased by $56 billion from the previous year, despite outflows.
ETFs listed in Europe saw outflows of 98 tonnes last year.
However, entries have been recorded in North America and Asia.
Inflows of 8 tonnes were recorded in North America and around 78.4 tonnes in Asia, according to WGC data.
This article was translated from English using artificial intelligence tools, then proofread and corrected by a local translator.
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