Gold dips, heads for recording weekly gains

Gold prices fell on Friday amid the rise of the dollar, but they are heading to record the fourth weekly rise in 5 weeks after receiving support from the Federal Reserve (the US central bank) maintaining its expectations to reduce interest rates during the current year.

According to Reuters, by 0319 GMT, gold in spot transactions fell 0.4% to $2,172.72 per ounce, but it rose 0.8% since the beginning of the week. US gold futures also fell 0.5% to $2,174.30 an ounce.

The dollar rose to a 3-week high against its competitors and is heading for a second week of gains, making gold more expensive for holders of other currencies.

Yip Jun Rong, a strategist at IG, said: “The upcoming interest rate cuts generally support gold prices… Currently, gold appears to be in a situation where it is priced much higher than its fair value, which could lead to some decline in the near term after… The wave of rise during the last period.”

Gold prices rose yesterday, Thursday, to their highest level ever after US Federal Reserve policymakers indicated that they still expect to cut interest rates by three-quarters of a percentage point by the end of 2024 despite the recent high inflation readings.

Prices of gold, which does not generate returns, usually rise when interest rates fall because this reduces the opportunity cost of holding bullion.