Gold prices fell more than 4% in Friday's trading session, after rumors emerged that the US Federal Reserve (Fed) may have a chairman with a more "hawkish" stance. However, the precious metal is still heading towards its strongest monthly increase since 1980, as investors continue to turn to gold as a safe haven amid prolonged geopolitical and economic instability.
Spot gold prices fell 3.9%, to 5,183.21 USD/ounce in this morning's trading session, after once plunging 5% in the session. The day before, gold prices had set a record high of 5,594.82 USD/ounce.
Since the beginning of January, gold prices have increased by more than 20%, on track to record the sixth consecutive month of increase, and the largest monthly increase since January 1980. On the futures market, gold futures for February delivery in the US fell 2.7%, to $5,176.40/ounce on Friday's session.
The emergence of the possibility of the Fed choosing a less'moderate' Chairman, along with the recovery of the USD and the excessive buying status of gold, has contributed to pulling the precious metal down" - Mr. Tim Waterer, chief trader at KCM, said.
US President Donald Trump said on Thursday that he plans to announce the person chosen to replace Fed Chairman Jerome Powell on Friday, amid growing speculation about the leadership of the US central bank after Mr. Powell left office in May.
Rumors that Mr. Kevin Warsh will replace Mr. Jerome Powell as Fed Chairman have put pressure on gold prices in Asian trading sessions," said Matt Simpson, senior analyst at StoneX.
Meanwhile, the USD has recovered from its long-term lows, partly thanks to the Fed's decision in Wednesday's meeting to keep interest rates unchanged, although the USD is still heading for its second consecutive week of decline. The strengthening USD makes gold priced in USD more expensive for foreign buyers. The market is still expecting the Fed to have two interest rate cuts in 2026.
In another development, gold exports from Switzerland to the UK - where the world's largest decentralized gold trading center is located - soared to their highest level since August 2019, according to customs data released on Thursday.
For other precious metals, spot silver prices fell 5.7%, to 109.55 USD/ounce, after setting a record high of 121.64 USD/ounce on Thursday. Despite a sharp correction, silver prices still increased by 56% this month, heading towards the strongest monthly increase in history.
