The Gold USD exchange pair skyrocketed in the earlier half of Friday’s trading session. Prices later fell during the second half of the day after failing to hold on to its gains.
Gold spot prices started the day around 1,427.99 US dollars before suddenly jumping up as high as 1,453.01 US dollars.
After a strong rally in early sessions, gold USD prices soon dropped 0.62% or 9.09 points. The exchange pair currently trades around 1,437.05 US dollars, compared to its previous close of 1,446.22 US dollars.
The intense rally was primarily due to the heightening tension in the Middle East.
US President Donald Trump said that the US Navy shot down an unmanned aircraft from Iran. Reports are saying that the Navy ship from the United States destroyed the Iranian drone in a defensive action.
Trump said the drone was flying too close to the USS Boxer who at that time was sailing along the Strait of Hormuz in the Persian Gulf.
The president added that the Iranian drone ignored multiple calls to stand down, which threatened the safety of the USS boxer and its crew. The tension helped the gold USD pair to rally.
Although, a senior spokesman for the Armed Forces of Iran later dismissed Trump’s claim.
Abolfazl Shekarchi, reportedly said that no Iranian drone that was flying along the Persian Gulf have been shot. He added that all drones have returned safely to their respective bases after their missions.
Another factor that contributed to the precious metal’s rally is the expectation of the market for an aggressive dollar rate cut.
The dollar has continued to struggle in this week’s session. The weaker-than-expected US housing data had the greenback on its backfoot, and the IMF’s annual report added more pressure to it.
The data from the IMF report said that the US dollar was well overvalued by 6% to 12% considering its current fundamentals.
IMF’s data further heightened the expectations of a deeper rate cut by the US Fed.
New York Federal Reserve President John Williams said that the wisest thing for the Fed to do is to cut interest rates.
The NY Fed President comments raised speculations about a 50-bps dollar rate cut.
However, earlier this morning, a spokesperson from the NY Fed clarified his points. He said that Williams’ statement was not about a potential action on monetary policies, but a mere academic speech.
The clarification helped the US dollar to make a recovery, which in turn meant a bad sign for the gold USD pair.
The gold USD might be trading at negative territories, but other precious metals in trading are rallying in today’s session.
Silver futures climbed up 0.165 points or 1.02%. The shiny white metal’s previous close is 16.198 US dollars and is currently trading around 16.363 US dollars.
Platinum futures also rose 11.50 points or 1.35%, trading around 861.35 US dollars against its last close of 849.90 US dollars.
While palladium futures gained 11.70 points or 0.77%. The price of the rare and lustrous metal is presently at 1,522.35 US dollars, compared to its previous close of 1,511.90 US dollars.