Gold prices rose slightly on Friday, yet remained set for a weekly decline as reduced expectations for a large Federal Reserve rate cut weighed on sentiment.
Spot gold gained 0.2% to $3,341.70 per ounce, while December Gold Futures added 0.1% to $3,387.80 per ounce. However, prices are still poised for a 1.5% weekly drop, largely due to Monday’s sharp fall following comments from U.S. President Donald Trump that gold bars would not face tariffs, as well as stronger-than-expected U.S. Producer Price Index (PPI) data.
Rate Cut Hopes Dented by Hot Inflation Data
Earlier in the week, mild U.S. consumer inflation figures strengthened the case for a September Fed rate cut, with markets even pricing in the possibility of a 50 basis point reduction. But this optimism faded after Thursday’s PPI release showed July inflation rising 3.3% year-on-year, the fastest pace since 2022, suggesting that tariffs were pushing up costs across the economy.
While markets still expect a September cut, the probability of a half-point reduction has dropped, with most now leaning towards a smaller 25 basis point move. Higher-for-longer interest rates continue to pressure gold, as they make interest-bearing assets more attractive compared to the non-yielding metal.
Geopolitical Focus: Trump-Putin Alaska Meeting
Beyond economic indicators, investor attention is on Friday’s summit between U.S. President Trump and Russian President Vladimir Putin in Anchorage, Alaska. Trump has warned of “severe consequences” if Russia blocks progress towards peace in Ukraine.
A constructive outcome could ease safe-haven demand for gold, while any breakdown in talks or renewed geopolitical tensions may trigger fresh buying in the precious metal.
Other Precious and Base Metals
- Platinum Futures rose 0.7% to $1,370.30/oz
- Silver Futures slipped 0.1% to $38.035/oz
- London Copper Futures gained 0.2% to $9,787/ton
- U.S. Copper Futures added 0.3% to $4.4930/lb
Stay Updated with Daily Gold Pakistan.