Investing.com – Gold prices dropped to a one-year low on Friday. Despite a stock market and dollar index dip after U.S. President Donald Trump criticised the central bank’s decision in raising interest rate, which would normally signal a move higher for the yellow metal, gold prices also headed down.
Gold Futures for August delivery on the Comex division of the New York Mercantile Exchangeis fell 0.51% to a trading price of $1,217.8 each troy ounce at 11:39PM ET (03:39 GMT).
“I am not thrilled,” said Trump in an interview with CNBC on Thursday. “Because we go up and every time you go up they want to raise rates again. I don’t really – I am not happy about it. But at the same time I’m letting them do what they feel is best.”
The comment piled pressure on the U.S. Dollar Index, which saw a 0.06% decrease to $94.92 on Friday, after rising to its one-year high of $95.129 the previous session after the U.S. Federal Reserve chairman Jerome Powell made a comment earlier this week on increasing interest rates.
Suki Cooper, a precious metals analyst at Standard Charted, said, “In the current environment, gold is really struggling to garner that safe haven demand. It seems to me a lot of that has to do with the fact that we're in a physically weak period, and you normally would have a better floor for prices."
But some predict a recovery of the precious metal price.
Bart Melek, head of commodities research at TD Securities said, “Gold does have the ability of a recovery this year, and I think there's a significant risk with the [yield] curve being near inversion here that things may be slowing, and the Fed isn't going to be as aggressive into 2019. We do see a reversal of U.S. dollar, basically helping gold into next year,"
In other news, the European Union (EU) is expected to retaliate against the U.S. after the latter imposed tariffs on European steel and aluminum in June. The EU has already imposed import tariffs on 2.8 billion euros (US$3.8 billion) worth of US products.
Cecilia Malmstrom, the EU’s trade commissioner, said, “We are preparing together with our member states a list of rebalancing measures there as well. And this we have made that clear to our American partners.”