Gold prices edged lower on Friday, heading toward their biggest weekly decline in over three months, driven by a stronger U.S. dollar. Investors are also closely watching upcoming U.S. inflation data for insights into the Federal Reserve’s future monetary policy.
As of 0232 GMT, spot gold was down 0.1% at $2,874.69 per ounce. The precious metal has fallen 2% this week, marking its largest weekly drop since November 2024. This comes after eight consecutive weeks of gains, setting the stage for its first weekly loss in two months.
U.S. gold futures also eased, falling 0.3% to $2,886.80.
The dollar index was on track for a 0.7% weekly gain, making gold, which is priced in U.S. dollars, more expensive for foreign buyers.
“While gold is traditionally viewed as a safe haven, the uncertainty surrounding trade policies may continue to prompt profit-taking amid a stronger dollar,” said Yeap Jun Rong, market strategist at IG.
On Thursday, U.S. President Donald Trump announced that his proposed 25% tariffs on Mexican and Canadian goods will go into effect on March 4. Additionally, a 10% duty on Chinese imports will also take effect, citing concerns over the ongoing flow of deadly drugs from those countries.
At the same time, Philadelphia Federal Reserve Bank President Patrick Harker expressed support for maintaining short-term borrowing costs within the current range of 4.25% to 4.50%.
Gold has historically been seen as a hedge against political instability and inflation. However, higher interest rates tend to diminish the appeal of the non-yielding asset.
Investors are now awaiting the release of the Personal Consumption Expenditures (PCE) data, the Federal Reserve’s preferred inflation measure, set for 1330 GMT.
“I do not expect rate expectations to shift significantly, as several components of the CPI and PPI suggest that PCE inflation could remain under control, limiting any impact on rate outlooks,” Yeap added.
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