Gold traded around $2,560 per ounce on Friday, on track for its worst week since June 2021, weighed down by a strong US dollar and reduced expectations for Federal Reserve rate cuts, which dulled the appeal of non-interest-bearing gold.
Gold records worst week since mid-2021
On Thursday, Fed Chair Jerome Powell indicated that there was no immediate need to cut rates, citing the economy's strength, a solid job market, and persistent inflation. His remarks echoed those of other Fed officials advocating for a cautious stance on rate cuts. As a result, market expectations for a December rate cut diminished, with traders now assigning only a 58% chance, down from 80% before Powell’s speech.
Trump's effect on gold
Additionally, investors speculated that an incoming Trump administration might push for higher tariffs, tax cuts, and increased deficit spending, potentially stoking inflation and further limiting the Fed's ability to ease borrowing costs.
