The strength of the dollar exacerbated pressure on gold. The U.S. dollar index advanced for a fourth straight week, driven by economic data that showed continued resilience in the labor market. Lower-than-expected jobless claims boosted expectations that the Fed may not need to accelerate rate cuts, boosting the dollar and making gold more expensive for international buyers.
Geopolitical tensions provide limited support
Despite economic headwinds, geopolitical uncertainties have provided intermittent support to gold. Increased tensions in Eastern Europe and the Middle East, including Israeli airstrikes and ongoing conflict in Ukraine, continue to fuel demand for safe havens. While this prevented sharper losses, it was not enough to establish sustained upward momentum.
Furthermore, the possibility of Donald Trump’s return to the White House in 2025 adds an additional layer of uncertainty. Potential trade conflicts and protectionist policies could disrupt markets and provide a longer-term bullish backdrop for gold.
Looking ahead
The price of gold next week will depend on government bond yields, the strength of the dollar and upcoming economic data from the US. While geopolitical risks remain supportive, Fed policy and interest rates remain the dominant factors. If interest rates continue to rise, gold could fall even further. However, weaker economic data or dovish commentary from the Fed could provide the spark needed to reignite buying interest.