Gold Prices Rise on Fed Cut Hopes

17 Jan 2025 , 09:28 AM

After U.S. statistics this week suggested that the Federal Reserve would continue to ease interest rates this year, gold prices solidified on Friday and were on track for a third consecutive week of gains.

Spot gold was steady at $2,715.21 an ounce, lingering close to a peak that was reached on Thursday that lasted more than a month. This week, bullion has increased by roughly 1% so far. At $2,747.50, U.S. gold futures fell 0.1%.

If U.S. economic data continues to deteriorate, Fed Governor Christopher Waller stated that three or four rate cuts might yet occur this year.

The Fed’s expectations of a rate cut grew following Wednesday’s CPI statistics.

At its policy meeting on January 28-29, the central bank is anticipated to maintain the benchmark rate in the current range of 4.25% to 4.50%.

Although gold is employed as a hedge against inflation, its appeal is diminished by rising interest rates.

A flurry of U.S. data, such as retail sales and preliminary unemployment claims, also supported gold by weighing on Treasury yields and the U.S. currency.

According to Richmond Fed President Thomas Barkin, U.S. inflation data for December 2024 shows that price pressures are still easing.

But there are still worries about possible tariffs under the new Donald Trump government, which would make inflation even worse.

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