Gold prices edged downward as the dollar strengthened on Friday. However investor optimism that the Federal Reserve will slow the pace of its rate hikes meant bullion was still poised for the fifth week in a row of gains.
Spot gold was down 0.2% to $1,928.06 per ounce at 1:49 PM ET (18:49 GMT) after hitting its highest price since April of 2022, when it touched $1,937.49 earlier in the session. So far this week, prices have increased 0.4%.
US gold futures were up 0.2% at $1,928.20.
Daniel Ghali, commodity strategist at TD Securities said, “The U.S. dollar is finding some form of stability and in turn we could see gold prices heading lower into next week.”
The dollar held strong against other currencies, making gold bullion more expensive for those who purchase it in currencies other than dollars, and driving down demand globally. However as the threat of a global slowdown grows, the Federal Reserve issues hawkish statements, and the US economic readings come in weak, investors are flocking to the precious metal.
Statements from officials of the Federal Reserve are pointing to a peak interest rate of over 5%, however traders are still betting on rates peaking at 4.9% by June. They are also predicting a 93.7% chance of a 25 basis point hike in the Fed funds rate in February.
Demand for gold increases as rate hike expectations decrease because it reduces lower rates reduce the opportunity cost of holding non-yielding bullion compared to bonds and other yielding investments.
Caesar Bryan, portfolio manager of the Gabelli Gold Fund pointed out that while central banks and agencies have been accumulating gold, gold ETFs held by individuals have been decreasing. If ETF buying were to return, any overbought dip in the precious metal would be limited.
In other precious metal news, silver was up 0.3% to $23.90 per ounce. Platinum rose 0.8% to $1040.50 as Palladium fell 1.7% to $1,725.04.
Ghali said, “When it comes to physical markets, platinum has received substantial amount of support from challenges in South Africa’s mining sector. We continue to expect platinum to outperform palladium.”
