Gold prices edged lower on Friday as some investors took profits after a recent rally that pushed the precious metal to record highs earlier in the week. Spot gold slipped by 0.4% to $2,724.50 per ounce, down from its peak of $2,758.37 reached on Wednesday. Despite the pullback, geopolitical tensions in the Middle East, particularly the ongoing conflict between Israel and Hezbollah, helped limit the decline as investors continue to seek safe-haven assets.
The drop in gold prices follows remarks by U.S. Secretary of State Antony Blinken, who expressed optimism about finding a diplomatic solution to the conflict. Speaking on Friday, Blinken emphasized the urgency of protecting civilians while working toward a ceasefire in the region. The ongoing violence has contributed to market uncertainty, which, along with broader geopolitical and economic risks, continues to impact commodity markets.
Investors are also keeping a close eye on the upcoming U.S. presidential election on November 5, which has added to the uncertainty surrounding the economy and financial markets. Adrian Ash, head of research at BullionVault, noted that any fluctuations in gold prices ahead of the election are likely to be shallow as investors look to "buy the dips" amid heightened volatility. "Going into the knife-edge election, any dips in gold are being bought and remain shallow," Ash said.
So far this year, gold has surged by 32%, positioning it for its largest annual gain since 1979, according to data from LSEG Workspace. The metal's rally has been driven by a combination of global geopolitical instability and economic uncertainty. However, the rise in gold prices has also affected demand in key markets like Asia. Discounts on gold have increased in China, and consumers in India have been purchasing less in volume terms due to the higher prices.
Palladium, another precious metal, saw a more positive day on Friday. Spot palladium hit a ten-month high of $1,168 per ounce for the second consecutive day amid concerns about potential disruptions to exports from Russia. Nornickel, which accounts for about 40% of the world's palladium production, has faced potential sanctions from the U.S. and its allies, driving up the metal's prices. Palladium rose 9% on Thursday following a Bloomberg report that the U.S. had asked the Group of Seven (G7) to consider sanctions on Russian palladium and titanium, which triggered short-covering in the palladium futures market.
Meanwhile, silver, which hit a 12-year high earlier in the week, also saw some profit-taking on Friday. Spot silver fell 1.4% to $33.23 per ounce, while platinum dropped 1.6% to $1,009.43 per ounce. Despite these declines, both metals remain well-supported by ongoing supply risks and investor demand.
Looking ahead, market participants are expected to closely monitor U.S. economic data next week, including key inflation and economic growth reports, which could add further volatility to precious metals. In particular, investors in non-yielding gold will focus on these data releases for signals about the health of the economy and the potential direction of interest rates. As Adrian Ash pointed out, "Next week's U.S. inflation and growth data will likely increase volatility in precious metals, especially with the looming election."
The recent fluctuations in the gold market also reflect broader investor sentiment. While gold has long been considered a safe haven during times of uncertainty, analysts have noted that routine profit-taking is a natural part of the market's behavior. "Corrections in uptrends are healthy," one market analyst explained, adding that such dips often provide opportunities for bullish traders to "buy the dips."
In the energy markets, crude oil prices rose slightly on Friday, with West Texas Intermediate (WTI) crude trading at $70.80 per barrel and Brent crude at $74.76 per barrel. However, oil markets remain volatile due to the ongoing conflict in the Middle East and broader concerns about global economic growth. The International Energy Agency (IEA) warned that global demand for oil could weaken due to slowing economic activity in China and the rising adoption of electric vehicles.
