A stronger dollar added to the pressure on gold. The U.S. dollar index rose for the fourth straight week, driven by economic data showing continued labor market resilience. Lower-than-expected jobless claims strengthened the view that the Fed may not need to cut rates more quickly, boosting the U.S. dollar and increasing the price of gold for overseas buyers.
Support limited due to geopolitical tensions
Despite economic headwinds, geopolitical uncertainty has intermittently supported gold. Rising tensions in Eastern Europe and the Middle East, including Israeli airstrikes and the ongoing conflict in Ukraine, continue to maintain demand for safe havens. While this avoided significant losses, it was not enough to foster sustained upward momentum.
Adding further uncertainty is the possibility that Donald Trump may return to the White House in 2025. Potential trade tensions and protectionist policies could disrupt markets and provide a bullish backdrop for gold in the long term.
For the future
The direction of gold next week will depend on US Treasury yields, dollar strength, and upcoming US economic data. Geopolitical risks remain supportive, but the main drivers remain Fed policy and interest rates. If yields continue to rise, gold could face further declines. However, weak economic data and dovish comments from the Federal Reserve could reignite buying interest.
