Gold up 1% amid US auto workers strikes and rate hike pause

Gold saw a 1% rise on Friday, benefiting from a weaker US dollar and increased safe-haven buying. This surge came as the United Auto Workers union initiated strikes at three automakers in Detroit. Additionally, there was optimism surrounding a potential pause in US interest rate hikes.

At 15:00 GMT, spot gold increased by 0.9% to $1,927.79 per ounce, and US gold futures also gained 0.9% to $1,949.70.

The US dollar slipped by 0.3% against other currencies earlier in the day, making gold more affordable for holders of different currencies.

Tai Wong, an independent metals trader based in New York, remarked, “Gold and silver are rallying due to heightened concerns.”

The United Auto Workers union simultaneously launched strikes at three factories owned by the “Detroit Three,” including Stellantis, the parent company of Chrysler, marking one of the most ambitious industrial labor actions in the US in decades.

Wong added, “The UAW strike seems likely to continue for a significant duration given the union’s demands. Furthermore, the potential government shutdown at the end of the month is receiving increased attention.”

Gold is frequently used as a safe haven during times of political and financial uncertainty.

Market participants are now looking ahead to the U.S. Federal Reserve’s policy meeting next week, where the central bank is widely expected to keep interest rates unchanged. Jim Wyckoff, senior market analyst at Kitco, said, “If the Fed leans slightly more dovish next week, it could have a significant impact and trigger a rally in the gold market.”

Meanwhile, China’s physical gold premiums surged to a new high this week, driven by strong demand to support a depreciating yuan and a lack of fresh import quotas.

In other metals, silver rose by 2.5% to $23.19 per ounce, platinum gained 1.9% to $923.12, and palladium eased by 0.1% to $1,249.57. All three metals were heading for weekly gains.