Gold Poised to End Nine-Week Rally Amid Profit-Taking and Trade Optimism
Gold prices faced a significant downturn on Friday, poised to end a remarkable nine-week rally. This drop of over 1% came as investors began taking profits amid signs of cooling trade tensions between the United States and China. The previous week saw a notable 4.3% decline in spot gold prices, the most substantial weekly drop since November 2024.
Market Overview
As of 0854 GMT, spot gold was priced at $4,063.46 per ounce, reflecting a 1.5% decrease. In addition, U.S. gold futures for December delivery had fallen by 1.7%, reaching $4,077.10 per ounce. The recent gains in gold prices, which surged by 55% this year, were primarily driven by ongoing geopolitical tensions and expectations of U.S. interest rate cuts.
Recent Performance
- Spot gold hit a record high of $4,181.21 earlier in the week.
- Investors are reacting to potential easing trade tensions ahead of a key U.S. inflation report.
- Economists expect solid consumer price growth for September from the upcoming U.S. Consumer Price Index report.
Traders also anticipate that the Federal Reserve might reduce interest rates by 25 basis points in its next meeting. Lower rates usually favor gold, making the non-yielding asset more attractive to investors.
Expert Analysis
Analyst Carlo Alberto De Casa from Swissquote noted that the recent rally was rapid, suggesting that investors are now securing profits or lowering their gold exposure due to easing trade concerns. Similarly, Russell Shor, a senior market analyst at Tradu, believes that while short-term corrections are likely, the overall trend for gold remains upward, supported by strong fundamentals.
Performance of Other Metals
Other precious metals also experienced declines. Spot silver fell by 1.6% to $48.13 per ounce, marking a potential weekly loss of 7.2%, its worst week since March. Platinum slipped to $1,610.59, down by 1.1%, while palladium dropped by 3.8% to $1,401.18.
The recent fluctuations in the dollar index, which increased by 0.6% for the week, have also made gold more expensive for investors using other currencies. With these market movements, investors continue to navigate the complexities of both domestic and international economic signals.
