Gold prices pressured by rallying US dollar

Gold has been declining since the beginning of daily trading on Friday, under pressure from the rise in the US dollar, which continues to benefit from the positive US data that was released on Thursday.

The US manufacturing PMI rose to its highest level in three years this March. US home sales also rose in February to the highest level in a full year.

The improvement in US labour market conditions and the housing sector highlighted the possibility that the Fed may reconsider the timing of the expected interest rate cut, which increases the uncertainty surrounding the future path of monetary policy.

The US dollar gained more strength from the Bank of England’s decision to keep the interest rate unchanged at its meeting held on Thursday, and no member of the British Monetary Policy Committee voted in favor of raising the interest rate for the first time since September 2021.

Weekly unemployment claims in the United States decreased, contrary to expectations, by 2,000 claims to 210,000 claims, which indicates the continued improvement in the American labor market, which is in favor of expectations of a delay in the interest rate cut.

The improvement in the US labor market conditions is considered one of the developments that would prompt the Federal Reserve to slow down the rate cut despite the progress it has made recently in reducing inflation.

The dollar had witnessed a significant decline one day ago, as an immediate reaction to Fed’s interest rate decision, in addition to the statements by Jerome Powell, Chairman of the Federal Reserve, in which he spoke in detail about the progress made by the central bank in reducing inflation.

Spot gold contracts fell to $2,159 per ounce, compared to the previous daily close, which recorded $2,181 per ounce. Precious metal contracts rose to their highest level on the last trading day of this week at $2,186, compared to the lowest level of $2,157 earlier on the day. At the time of writing, spot gold is trading at $2163.93 per ounce, down -0.80%, and gold futures are trading at $2166.20 per ounce, down -0.85%.