Gold fell toward $2,850 per ounce, heading for its biggest weekly drop since November, as a stronger dollar and shifting interest rate expectations weighed on the metal.
Gold set for biggest weekly drop since November
Markets have continued to price in only two Federal Reserve rate cuts this year, as inflation remains above the 2% target and recent economic data has reinforced the Fed’s cautious stance. The latest PCE report showed prices rising 0.3% month-over-month in January, in line with expectations, while the annual rate eased slightly to 2.5% from 2.6% in December.
Meanwhile, consumer spending unexpectedly declined by 0.2%, marking the first drop in nearly two years, even as personal income surged 0.9%, the biggest increase in a year. The combination of lower spending and higher income suggests that consumers may be growing more cautious amid persistent inflation and economic uncertainty.
Attention turns to US trade policy
Markets are also turning their attention to US trade policy, as President Donald Trump confirmed that 25% tariffs on Mexican and Canadian goods will take effect on March 4, alongside an additional 10% duty on Chinese imports. He also threatened to impose 25% levies on European Union goods, escalating concerns over global trade disruptions.
For the week, gold lost 2.7%, snapping its longest winning streak since 2020 after eight consecutive weeks of gains. However, despite the recent pullback, prices still managed to rise 1.4% in February, supported by ongoing geopolitical risks and central bank purchases. Investors will now closely watch upcoming economic data and Fed commentary for further clues on the direction of monetary policy.
