Gold Prices Slip, Set for Largest Weekly Drop in Over Three Months

Gold prices edged lower on Friday, heading toward their biggest weekly decline since November 2024, as a stronger US dollar pressured the metal while investors awaited key US inflation data for further insights into the Federal Reserve’s monetary policy.

Spot gold dipped 0.1% to $2,874.69 per ounce as of 0232 GMT, while US gold futures eased 0.3% to $2,886.80. So far this week, bullion has fallen 2%, marking its first weekly decline after eight consecutive gains.

A stronger dollar has played a significant role in gold’s pullback, with the US dollar index gaining 0.7% for the week, making the metal more expensive for foreign buyers.

“While gold is considered a safe-haven asset, uncertainty over trade policies and a strengthening US dollar could extend profit-taking activities,” said IG market strategist Yeap Jun Rong.

Markets are also reacting to US President Donald Trump’s announcement that proposed 25% tariffs on Canadian and Mexican goods will take effect on March 4, alongside an additional 10% duty on Chinese imports. The move is part of Trump’s effort to curb the flow of illicit drugs into the US from those countries.

Meanwhile, Philadelphia Federal Reserve Bank President Patrick Harker signaled support for keeping short-term borrowing rates between 4.25% and 4.50%, reinforcing expectations that the Fed will hold off on immediate rate cuts.

Gold is traditionally seen as a hedge against political risks and inflation, but higher interest rates can reduce its appeal by increasing the opportunity cost of holding the non-yielding asset.

Investors are now focused on the Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, set to be released at 1330 GMT.

“I don’t expect a major shift in interest rate expectations,” Yeap added, citing indications from CPI and PPI data that inflation may remain under control.

With economic data and trade policies influencing market sentiment, gold traders will be watching for any further developments that could sway prices in the coming weeks.