Why is gold slipping sharply as the dollar surges ahead of the all-important US inflation report — what critical risks and opportunities should investors brace for in 2025?
TIL Creatives Gold prices fall as US dollar strengthens ahead of key US inflation data. Investors watch the PCE index closely for Fed signals. Silver and platinum also dip amid trade tensions. Stay updated on gold market trends and inflation impact today.
Gold falls, US dollar strengthens ahead of key US inflation data- Gold prices dropped on Friday as the US dollar climbed, with investors staying cautious ahead of important inflation numbers set to come out later today. The upcoming data is closely watched because it will help signal the Federal Reserve's next moves on interest rates and monetary policy. As of 11:45 GMT, spot gold was down 0.7% at $3,292.28 an ounce, marking a weekly decline of nearly 2%. US gold futures also slipped 0.8%, landing at $3,290.30. Meanwhile, the US dollar index (.DXY) rose by 0.3%, heading for a weekly gain. A stronger dollar often makes gold more expensive for buyers using other currencies, which can weigh on prices.
Gold and the US dollar often move in opposite directions. When the dollar gains ground, gold tends to lose some shine. Carsten Menke, an analyst at Julius Baer, explained, 'The US dollar is up slightly, which could be a source of pressure for gold.' This rise in the dollar makes gold pricier for international buyers, reducing demand.
Investors are waiting on the Personal Consumption Expenditures (PCE) index, the Federal Reserve's preferred measure of inflation, due at 12:30 GMT. Economists surveyed by Reuters predict the April data will show inflation rising 2.2%, slightly lower than March's 2.3%. According to Menke, 'Barring a major surprise to the PCE data, I would not expect gold to show a meaningful reaction.' However, the market has been jittery lately, so short-term price swings are possible.
Tim Waterer, chief market analyst at KCM Trade, noted, 'With US core PCE looming large, there is some hesitance to take new long positions in gold.' Investors are holding back on buying more gold until the inflation figures come out. There's also growing anticipation of interest rate cuts from the Fed later this year, possibly starting in October, with expectations around 50 basis points of cuts.
Gold is traditionally seen as a hedge against economic and geopolitical risks, especially when interest rates are low. However, in the current climate, rising US dollar strength and looming inflation data create uncertainty. This mixed environment means gold's role as a safe haven is being tested.Silver prices also slipped 0.6% to $33.14 an ounce, while platinum eased 1.2% to $1,068.80. Palladium followed with a 0.6% drop, trading near $967.70. These metals often react similarly to gold, influenced by broader market shifts and economic indicators.In related news, a federal appeals court temporarily reinstated the most sweeping of President Donald Trump's tariffs on Thursday. This came a day after a US trade court had blocked those tariffs, saying Trump had overstepped his authority. Trade tensions like these can add another layer of uncertainty for investors considering precious metals.
Why is gold falling as the US dollar strengthens?Gold usually falls when the US dollar rises because it becomes more expensive for buyers using other currencies.
How will the US inflation data affect gold prices?
If inflation data surprises, gold prices might move sharply, but a typical reading usually means little change.
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