Gold's largest weekly fall in three years amid Fed rate stance
Gold prices have recorded their largest weekly decline in over three years. According to Reuters, this decrease is due to the US Federal Reserve's diminishing expectations for further interest rate cuts, which has strengthened the dollar and reduced gold's attractiveness to investors.
The price of gold dropped slightly on Friday, reaching CAD 2,468 per ounce. On a weekly basis, however, the drop amounted to over 4%, marking the lowest level since September 12. Reuters reports that this trend is related to declining expectations for interest rate cuts by the US Federal Reserve, which has led to a stronger dollar.
A drop in gold prices unseen in years
Bloomberg notes that the increased drop in gold prices has also been affected by Donald Trump's victory in the US presidential election. The decline in the metal's value accelerated in the week following the Republican's electoral triumph. Economists point out that current trade policies may lead to rising inflation, which could influence the US Federal Reserve's decisions on interest rates.
Higher interest rates make investments in gold less attractive, as it is a non-interest-bearing asset. Fed Chair Jerome Powell commented on Thursday that the central bank does not plan to lower interest rates in the US shortly.
"So far gold has been negatively impacted by the election of Trump but this can change if there is some more uncertainty which could come back in the medium term," said Carlo Alberto De Casa, a market analyst at Kinesis, as quoted by Reuters. The price of silver fell by 0.4% to CAD 31 per ounce during the session on Friday, November 15. The decline in platinum prices was less noticeable, with a decrease of 0.1% to CAD 1340.
