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At 11:47 GMT, XAU/USD is trading $2861.41, down $15.78 or -0.55%.
First Weekly Loss in Nine Weeks Looms
Gold is on track for its first weekly loss in nine weeks, driven by a strengthening U.S. dollar and investor caution ahead of the U.S. Personal Consumption Expenditures (PCE) data. The dollar index has climbed to 107.451, gaining nearly 0.9% on Thursday alone. A stronger dollar makes gold more expensive for international buyers, pressuring prices.
The greenback found support as U.S. President Donald Trump announced 25% tariffs on Mexican and Canadian goods starting March 4, along with an additional 10% duty on Chinese imports. The risk-off sentiment buoyed the dollar despite a generally weaker economic outlook in the U.S.
Inflation Data Could Shift Market Sentiment
Traders are eyeing the upcoming PCE data, the Federal Reserve’s preferred inflation gauge, due at 13:30 GMT. Expectations are for a 0.3% month-over-month increase and a 2.5% annual rise. Core PCE, excluding food and energy, is projected to increase by 0.3% monthly and 2.6% yearly.
If the PCE data shows cooling inflation, it could bolster expectations for further Federal Reserve rate cuts, potentially weakening the dollar and offering support to gold prices. However, higher interest rates generally diminish the appeal of non-yielding assets like gold.
Market Jitters as Tariff Threats Cloud Outlook
Investor sentiment remains cautious as Trump maintains a hard stance on tariffs. His proposed 25% tariffs on European Union imports, initially set for Wednesday, are now uncertain following discussions with U.K. Prime Minister Keir Starmer. While Trump hinted at a potential trade deal, uncertainty persists, contributing to market volatility.
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