Dollar weakness drives demand for gold as a safe haven.
On Friday, gold prices experienced a weekly increase, driven by a weaker dollar and the demand for safe-haven assets due to rising tensions in the Middle East, despite the U.S. Federal Reserve dampening expectations of early rate cuts this year.
The price of spot gold increased by 0.6% to $2,035.99 per ounce, and it was predicted to achieve a 1.4% increase in value during the week.
U.S. gold futures settled 0.8% higher at $2,046.3
The dollar index dropped 0.1% and was on track for its first weekly decline in nearly two months as investors paused from a recent surge fueled by anticipation that the Fed would postpone rate cuts. Additionally, U.S. Treasury yields decreased during the week, making gold a more attractive option for foreign investors due to its lower cost.
According to Bob Haberkorn, senior market strategist at RJO Futures, gold is rising mainly because the U.S. dollar is weaker.
Despite the high rates in the precious metals market, there is a significant amount of safe-haven buying occurring.
On Thursday, Christopher Waller, the Fed Governor, stated that he was not in a hurry to lower interest rates, which strengthened investor predictions that U.S. interest rate cuts would not occur before June.
The minutes of the Fed's last meeting revealed that most policymakers were concerned about the risks of cutting interest rates prematurely.
The recent data indicating higher-than-anticipated U.S. consumer and producer prices has put an end to speculation about an early interest rate cut, adding to the pressure on gold prices.
Lower interest rates boost the appeal of holding non-yielding bullion.
UBS analyst Giovanni Staunovo stated that "modest drag" was caused by "hawkish comments from Fed officials overnight" regarding gold.
As a result of the growing popularity of bitcoin ETFs, investors are increasingly trading in their gold-backed ETFs.
Platinum lost 0.1% to $901.20, palladium rose 0.9% to $976.00, silver was up 0.8% to $22.9275, but had fallen 1.8% so far in the week.
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