Gold prices took a sharp dip on Friday, with spot gold down 1.5% at $2,325.37 per ounce and U.S. gold futures slipping 1.3% to $2,338.40. This drop was attributed to a rise in interest rates and a strong dollar following positive U.S. economic data, according to Bart Melek, head of commodity strategies at TD Securities.
On the other hand, U.S. business activity saw a slight increase to a 26-month high in June, coupled with a rebound in employment. The dollar also rose by 0.2% to its highest level in over seven weeks, making gold more expensive for other currency holders.
Traders are currently predicting a 63% chance of a Fed rate cut in September, which would reduce the opportunity cost of holding non-yielding bullion. Meanwhile, spot palladium saw a significant increase of 11.2% to $1,027.04.25 per ounce, causing a short-term physical shortage due to increased ETF buying.
Despite gold’s decline, platinum rose by 1.5% to $992.43 per ounce, while silver fell by 3.5% to $29.64. Both metals, however, were still on track for a weekly gain. The market volatility, particularly in the palladium sector, is expected to continue for the next few days.
Overall, the precious metals market continues to see fluctuations driven by economic data and investor sentiment, with traders keeping a close eye on potential Fed rate cuts and supply-demand dynamics in the coming days.
