Gold prices fell sharply on Friday, capping off a bearish week for the metal, amid doubts over the timing of interest rate cuts and ahead of the Chinese New Year break.
Prices fell to around $2,025 an ounce in late deals Friday, down from a high of $2,038 an ounce seen on Thursday.
Gold was trading comfortably at around $2,032 to $2,034 an ounce in the morning session, but prices started to come under pressure soon after midday, and from there it was all downhill.
Recent economic data have indicated a relatively strong US economy and this has weighed on expectations that the US Fed will start to cut interest rates in the near term. Data from interest rate traders points to a roughly 52% chance of a 25-basis point rate cut on May 1, and a 39% chance of no change, according to the CME FedWatch Tool.
The uncertainty over the timing of rate cuts in the coming months means the market will likely continue to focus on the release of macroeconomic data from the US, to gauge the temperature of the economy, and in particular inflation levels.
The dip in interest through the week may also reflect an expected temporary loss of demand from Chinese buyers ahead of the seven-day Lunar New Year break which runs from February 10 to 17 this year.
On the investor side, global gold ETFs started 2024 with the eighth monthly outflow, according to the World Gold Council. Collective holdings of global gold ETFs fell by 51 tons to 3,175 tons, or a drop of $2.8 billion, it said in a report February 7.
Looking ahead this week, Tuesday will see the release of US inflation figures for January, which should help provide further clues on the outlook for monetary policy.
Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.
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