Gold inched higher on Friday, buoyed by declining oil prices and a subdued US dollar. Market participants remained attentive to developments in the Middle East and the broader outlook for global monetary policy. Spot gold increased by 0.3% to $4,352.60 per ounce, as of 0050. US gold futures for December delivery experienced a decline of 0.2%, settling at $4,391.60. Oil prices fell by 1%, as the dollar persisted in showing weakness after its recent highs. A depreciated dollar makes commodities priced in U.S. dollars less expensive for holders of alternative currencies.
The Federal Reserve raised interest rates on Wednesday and indicated the possibility of additional hikes in the forthcoming months. Updated quarterly economic projections indicated that 16 of 18 policymakers anticipate at least one additional quarter-percentage-point increase by the year’s end. Goldman Sachs has upheld its end-2027 gold price forecast at $5,400 per troy ounce, indicating that while the recent rise in US interest rates may dampen the momentum of bullion’s rally, it will not entirely hinder it.
Gold is traditionally regarded as a safeguard against inflation; however, elevated interest rates may diminish its demand by enhancing the attractiveness of yield-generating investments. The Bank of England maintained its current interest rates on Thursday, yet indicated the possibility of an increase in the future. The Bank of Japan is set to raise interest rates to a level not observed in 31 years on Friday, while also pledging to undertake additional measures to alleviate inflationary pressures.
Data indicated that the number of Americans submitting new claims for unemployment benefits experienced an unexpected decline last week. However, this decrease was likely amplified by the Labour Day holiday, with the fundamental trend suggesting ongoing stability in the labour market. Spot silver increased by 0.7% to $65.64 per ounce, while platinum experienced a rise of 0.9% to $1,785.55. Palladium experienced a slight increase of 0.1%, reaching a price of $1,292.47.
