Gold prices remained relatively stable on Friday, mitigating earlier losses, but are poised to record a modest weekly increase. This stability comes as recent US jobs data bolsters expectations that the Federal Reserve will likely maintain current interest rates at its upcoming meeting.
Spot gold traded near $US3370 an ounce, recovering slightly after a 0.6 per cent dip on Thursday. The previous decline occurred following a report indicating that applications for US unemployment benefits have decreased for six consecutive weeks, marking the most extended period of declines since 2022. This data contributed to a strengthening US dollar and rising US Treasury yields, which typically exert downward pressure on gold as it does not offer interest. Swap traders consequently tempered their expectations for Fed rate cuts, now anticipating fewer than two reductions this year, with the initial full cut anticipated in October.
Market participants also digested the latest exchange between US President Donald Trump and Federal Reserve Chairman Jerome Powell, who publicly disagreed about the central bank’s renovation project costs. Trump repeated his opinion that Powell should implement interest rate cuts but suggested the renovation dispute was insufficient grounds for dismissing the central bank leader.
Year-to-date, gold has increased by over 25 per cent, fuelled by uncertainty surrounding Trump’s trade policies and geopolitical tensions in Ukraine and the Middle East. This uncertainty has spurred investors to seek safe-haven assets. Despite this, the precious metal has traded within a narrow band since peaking at an all-time high above $US3500 an ounce in April, as investor confidence in risk assets has grown amid progress in US trade negotiations.
