Gold prices fell on Thursday, pressured by a stronger US dollar and easing geopolitical tensions. The decline came after unexpected data showed US weekly jobless claims dropping, boosting the dollar to multi-week highs.
Market Movements and Key Data
Spot gold decreased by 0.3% to $4,607.59 per ounce as of 09:32 a.m. ET. This followed a record high of $4,642.72 reached on Wednesday. US gold futures for February delivery also fell, dropping 0.5% to $4,612.50.
The dollar index climbed to its highest level since December 2. This surge made gold more expensive for buyers using other currencies. New applications for US unemployment benefits unexpectedly fell last week, supporting the dollar's strength.
Analyst Insights on Gold's Decline
Peter Grant, vice president and senior metals strategist at Zaner Metals, commented on the situation. He noted that recent data suggests the Federal Reserve might hold interest rates steady in the first half of the year. This expectation contributed to the dollar's rise, creating a headwind for gold prices.
Grant described gold's move as corrective. He expects traders to view price dips as buying opportunities. Safe-haven assets like gold often perform well during periods of uncertainty, but current conditions are shifting.
Political Factors Influencing Markets
US President Donald Trump's statements on Wednesday impacted market sentiment. He said he has no plans to fire Federal Reserve Chair Jerome Powell, despite a Justice Department investigation. However, Trump indicated it was too early to make a final decision.
The Federal Reserve is widely expected to keep interest rates unchanged at its upcoming meeting. Markets anticipate at least two rate cuts later in the year, each potentially 25 basis points.
Iran Situation and Geopolitical Tensions
Trump also addressed the situation in Iran. He stated that killings during Iran's crackdown on protests appeared to be easing. He saw no immediate plan for large-scale executions, signaling a wait-and-see approach. This moderated tone reduced safe-haven demand for gold.
Grant mentioned that easing geopolitical tensions had slightly weighed on gold prices. The metal's role as a safe-haven asset means it benefits from uncertainty, but current developments are reducing that pressure.
Other Precious Metals Performance
Silver prices experienced a significant drop, sliding 3.6% to $89.29 per ounce. Earlier in the session, silver had hit an all-time high of $93.57.
Platinum and palladium also declined. Spot platinum receded 0.4% to $2,375.55 per ounce, while palladium lost 1.8% to $1,806.68 per ounce.
Overall, the precious metals market reacted to a combination of economic data and geopolitical developments. The stronger dollar and reduced tensions contributed to the downward trend.
