Background on Key Figures
Donald Trump, the President of the United States, is set to meet with his Chinese counterpart, Xi Jinping, next week during his Asia trip. This meeting has eased concerns about escalating trade tensions between the two countries.
Market Overview and Factors Influencing Gold Prices
Gold prices dropped over 1% on Friday, nearing the end of a nine-week winning streak. Investors were taking profits, and signals of easing trade tensions between the U.S. and China reduced demand for safe-haven assets ahead of a crucial U.S. inflation report.
Spot gold fell 1.5% to $1,406.46, marking a weekly decline of 4.3%, its largest weekly drop since November 2018. U.S. gold futures for December delivery slid 1.7% to $1,407.10 per ounce.
This year, gold has surged 55% due to geopolitical turmoil, central bank purchases, and expectations of U.S. interest rate cuts. On Monday, spot prices reached a historic high of $1,481.21, surpassing the $4,000 per ounce mark for the first time this month.
Carlo Alberto De Casa, an external analyst at the Swissquote banking group, stated, “The recent rally has been too rapid, and investors bet that U.S.-China trade tensions may ease.”
Anticipated Economic Indicators and Federal Reserve Actions
Market participants are awaiting the latest U.S. Consumer Price Index report, expected to show robust consumer price growth for September. The report is scheduled for release at 6:30 AM CDMX time.
Markets continue to anticipate that the Federal Reserve will cut interest rates by 25 basis points at its upcoming meeting.
Lower interest rates typically benefit gold, as they reduce the opportunity cost of holding non-yielding bullion.
The dollar index was up 0.6% for the week, making gold more expensive for holders of other currencies.
Performance of Other Precious Metals
Among other precious metals, silver spot prices fell 1.6% to $18.13 per ounce, heading for its worst week since March with a 7.2% decline so far. Platinum dropped 1.1% to $1,610.59 per ounce, and palladium lost 3.8% to $1,401.18 per ounce.
Key Questions and Answers
- Who are the key figures mentioned? Donald Trump, President of the United States, and Xi Jinping, President of China.
- What factors are influencing gold prices? Investors taking profits, easing trade tensions between the U.S. and China, anticipation of a Federal Reserve interest rate cut, and the dollar index rising.
- What economic indicators are being awaited? The latest U.S. Consumer Price Index report, expected to show robust consumer price growth for September.
- How are other precious metals performing? Silver is down 1.6%, platinum is off by 1.1%, and palladium has dropped 3.8%.
