Gold prices fell in early Friday trading, with the precious metal set to close the week in the red, currently down by almost three percent. The weakness in gold is correlated with the strengthening of the US dollar, which has been gaining ground against other major currencies over recent sessions. The greenback’s gains are being supported by growing hawkish Fed expectations, which received a further boost this week following the release of US economic data. Inflation is rising in the world’s largest economy, while retail sales remain resilient, increasing the likelihood that the Federal Reserve could raise interest rates at least once in 2026. This creates scope for further dollar strength and additional downside pressure on gold. Against this backdrop, gold traders will remain focused on the ongoing high-level talks between the US and China, as well as developments in the Persian Gulf. A potential US-China understanding on trade could help alleviate some inflationary pressures, while the continuing closure of the Strait of Hormuz is keeping oil prices elevated, with the opposite effect on consumer prices.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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