Gold prices rose in European trade on Friday, resuming gains after a short hiatus yesterday and heading for a weekly profit as the dollar dipped against a basket of major rivals.
It comes after the US credit rating downgrade, which renewed concerns about the US financial stability and raised the challenges facing US policymakers.
The Price
Gold prices rose 1.2% today to $3334 an ounce, with a session-low at $3287.
On Thursday, gold lost 0.6%, the first loss in four days on profit-taking away from a two-week high at $3345 an ounce.
Weekly Trades
This week, gold prices are up 4% so far, on track for the second weekly profit in three weeks, and the largest such profit in six.
US Dollar
The US dollar index fell 0.5% on Friday on track for a two-week trough at 99.34 against a basket of major rivals.
The greenback is pressured by increasing concerns about the US financial stability, nudging investors towards safer havens.
It comes after Moody’s decision to cut the US credit rating last week, the investor focus turned to the massive US debt reaching $36 trillion, and to Trump’s new tax reform bill, which would add trillions to this burden.
Trump described the legislation as a “big beautiful bill”, and has already passed the House of Representatives and headed to the Senate where it’s expected to face months of discussions and changes.
US Rates
US President Donald Trump once again called on the Federal Reserve to cut interest rates in posts on his social media accounts.
Atlanta Fed President Raphael Bostic said earlier this week that he’s leaning towards a single interest rate cut this year.
According to the Fedwatch tool, the odds of a Fed 0.25% interest rate cut in June stood at just 8%.
The odds of a 0.25%% Fed rate cut in July stood at 37%.
Traders now expect 50 basis points overall of Fed rate cuts this year, likely starting in October.
SPDR
Gold holdings at the SPDR Gold Trust rose 4.01 tons yesterday to a total of 923.89 tons, the highest in a week.
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