By: Economy Middle east

Gold prices declined on Friday but were poised to record a weekly gain, buoyed by a softer dollar as investors awaited fresh U.S. economic data to assess the chances of a December rate cut following a series of hawkish remarks from Federal Reserve officials.

In the UAE, gold rates marked notable increases, with 24-carat gold gaining AED4.25 to AED506.5 and 22-carat gold rising AED3.75 to AED469. Additionally, 21-carat gold edged up AED3.75 to AED449.75, and 18-carat gold gained AED3 to AED385.5.

Globally, spot gold dipped 0.03 percent to $4,189.4 per ounce as of 5:30 GMT, bringing its weekly increase to about 5 percent. Meanwhile, U.S. gold futures for December delivery edged down 0.06 percent to $4,191.90 per ounce.

The U.S. dollar index was on track for a second consecutive weekly decline against major currencies, boosting gold’s appeal for holders of other currencies. The index was last trading flat at 99.15.

Softer dollar supports bullion

Gold has performed strongly this week, largely driven by a softer dollar and speculative buying on expectations of Federal Reserve rate cuts. However, with the U.S. government reopening and persistent concerns over slowing growth and inflation, expectations have shifted somewhat, suggesting the Fed may not move aggressively on rate cuts. This adjustment led to a modest pullback in gold prices.

Amid lingering inflation concerns and signs of stability in the labor market following two rate cuts earlier this year, an increasing number of Federal Reserve policymakers are signaling caution on further easing.

Last month, the Fed reduced rates by 25 basis points, but Chair Jerome Powell emphasized prudence regarding additional cuts this year, citing limited data.

Weakening fiscal outlook in focus

Gold prices continued to rise as the nearly 43-day government shutdown came to an end this week, with official economic data expected to resume publication in the coming weeks. With the U.S. government reopening, market attention has returned to the country’s weakening fiscal outlook. Investors now expect the backlog of delayed economic data to reveal softening in the economy, potentially reinforcing arguments for additional Federal Reserve policy easing.

Economists estimate that the nearly 43-day shutdown may have already trimmed around 1.5-2 percent from quarterly GDP growth. Coupled with signs of weakening labor market conditions, this has kept the U.S. dollar from rebounding from its two-week low.

A senior White House official indicated that key October economic reports, including employment and inflation data, might not be released at all. The lack of data prompted several Federal Reserve officials to express caution on further easing, leading investors to scale back expectations for a December rate cut.

Minneapolis Fed President Neel Kashkari described the economic outlook as mixed, noting that inflation remains elevated. Meanwhile, Boston Fed President Susan Collins added that, given the limited inflation data due to the government shutdown, she would be reluctant to loosen policy further.

Traders are currently assigning a 51 percent probability to a quarter-point rate reduction next month, down from 64 percent in the previous session, according to CME Group’s FedWatch tool. In such an environment of low interest rates and economic uncertainty, non-yielding assets like gold typically see prices rise.

Other precious metals

As gold prices were headed for a notable weekly gain, the precious metals market saw positive movement. Spot silver climbed 1.3 percent to $53 per ounce, putting it on course for its strongest weekly gain since September 2024, up nearly 9.7 percent. Platinum rose 1 percent to $1,596.10, while palladium advanced 1.4 percent to $1,446.31 on Friday.