Gold prices fall: US rate outlook shifts; experts see short-term pressure
Gold prices fell on Thursday after touching record highs earlier this week, as investors booked profits amid shifting expectations on US interest rates. Reduced hopes of near-term Federal Reserve rate cuts, easing political risks, and a stronger US dollar weighed on prices, though analysts remain positive on gold’s overall outlook.
Gold prices fall
Gold prices fell on Thursday, after reaching record levels earlier in the week. Investors booked profits as market focus shifted to US interest rate policy and improving risk sentiment. Spot gold fell 0.3% to $4,824.18 per ounce. Prices had dropped nearly 1% earlier in the session. US gold futures for February delivery were down 0.2% at $4,826 per ounce. On Wednesday, gold had hit an all-time high of $4,887.82 per ounce. So far this year, bullion is still up more than 12%.
US interest rates
The main reason for the fall in gold prices was a change in expectations around US interest rates. Markets are now less confident that the Federal Reserve will cut rates in the near term. Higher interest rates reduce the appeal of gold because it does not earn interest. As a result, investors often move money away from gold when rates are expected to stay high. A Reuters poll showed that the Federal Reserve is likely to keep its key interest rate unchanged through the current quarter. Rates may remain on hold until the end of Chair Jerome Powell’s term in May. Investors are now watching US jobless claims data and the Personal Consumption Expenditures index, the Fed’s preferred inflation measure, for more signals on future policy.
Politics
Political developments also played a role in easing demand for gold. US President Donald Trump stepped back from earlier threats related to tariffs and disputes over Greenland. He ruled out the use of force and suggested that talks were moving toward a deal. At the same time, US Supreme Court justices expressed doubts over Trump’s attempt to remove Federal Reserve Governor Lisa Cook. The case has drawn attention because it involves the independence of the central bank. A modest recovery in the US dollar added further pressure on gold prices.
Other metals
Other precious metals traded in a mixed range. Spot silver rose 0.5% to $93.71 per ounce after hitting a record earlier in the week. Platinum edged up 0.1% to $2,484.74 per ounce, while palladium gained 1.1% to $1,860.54. Despite the short-term fall, analysts remain positive on gold’s outlook. Henrik Marx of Heraeus Precious Metals said prices could still move above $5,000 per ounce in the near term, even if volatility continues.