contra
Despite Friday’s gain, gold is still on track for a weekly decline of 7%, the Wall Street Journal reported, which would be the metal’s second weekly decline in a row. Metals fell to their lowest levels in months this week, with gold touching a six-month low on Thursday, as analysts largely attributed the decline to expectations the Federal Reserve will hike interest rates, which generally causes metals prices to dip. “Gold prices are moving in line with statements from the U.S. President, but the overriding influence remains inflation, with markets expecting rate hikes from the ECB and also anticipating that the Fed will follow,” Quantitative Commodity Research analyst Peter Fertig told Reuters on Friday.
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what to watch for
Whether the Federal Reserve will raise interest rates. The Fed is set to hold its first policy meeting next week with Kevin Warsh, Trump’s pick to lead the central bank, as its chair. Warsh has faced pressure from Trump to cut rates, though economists have said inflation pressures will most likely cause the Fed to keep rates steady next week, though rates could rise later in the year.
key background
Gold and silver are still up year-over-year, though they’ve both fallen far from the all-time highs they reached in January, when gold hovered around $5,600 and silver surpassed $120. Those prices were the culmination of a months-long historic price rally, fueled by lower interest rates, tariffs, international tensions and increasing demand for metals by the technology industry. Prices crashed after Trump nominated Warsh to lead the Fed, as he was considered likely to cut interest rates. Metals prices have declined throughout the Iran war as oil prices have surged.
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further reading
Gold And Silver Price Hit 2-Month Lows Following Iran Tensions, Interest Rate Hike Fears (Forbes)
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