Today market analysis on behalf of Hani Abuagla Senior Market Analyst at XTB MENA
Gold prices are on track for their first weekly loss in nearly two months as investors lock in profits following record highs. A strong US dollar, amid strong economic data, is increasing selling pressure on the bullion market. The US economy grew by 2.3% in Q4 2024, and order goods surged by 3.1%, fueling expectations of a hawkish Federal Reserve stance, which dampens the outlook for non-yielding short-term assets like gold.
The market could continue to see volatility as traders assess the impact of trade tensions. Recent developments, including the US’s decision to maintain tariffs on Mexico and Canada and announce a new 25% tariff on European cars, could stoke inflationary pressures and economic growth risks, fueling volatility.
On the geopolitical front, peace talks to resolve the Ukraine-Russia conflict could weigh on gold’s prices in case of a positive outcome as a risk-on sentiment could reduce the demand for gold. However, any setback could reignite gold’s appeal.
Today’s Personal Consumer Expenditure (PCE) numbers could play a pivotal role in shaping gold’s trajectory. Strong numbers could reinforce the dollar’s gains and weigh further on gold, while softer numbers may help limit losses.