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Gold prices slipped slightly on Friday morning after a US inflation reading that came in below expectations reduced bullion’s attraction as a hedge against rising prices, although analysts say the rally still has further to run in 2026.
Gold futures lost 0.3% to $4,351.80 an ounce, while spot gold was muted at $4,326.73 at the time of writing.
“The softer inflation print was a bit of a double-edged sword (for gold and silver), in that it helps justify a dovish trajectory from the Fed, but it also means that they lose some of their appeal as an inflation hedge,” said Tim Waterer, chief market analyst at KCM Trade. “The dollar standing its ground is also creating some resistance.”
Read more: FTSE 100 LIVE: Stocks tick higher as Black Friday fails to give UK retail sales a boost
Goldman Sachs (GS) expects gold prices to rise 14% to $4,900 per ounce by December 2026 under its base case, according to a note published on Thursday. The bank added that there were upside risks to this forecast, citing the potential for broader diversification demand from private investors.
In a separate note outlining its commodities outlook for 2026, Goldman Sachs said it expected structurally high central bank demand and cyclical support from US Federal Reserve interest rate cuts to underpin higher gold prices. The bank said it continued to recommend long exposure to the yellow metal.
Oil prices fell in early trading on Friday and were on course to end lower for a second consecutive week, as growing expectations of a peace deal between Russia and Ukraine outweighed concerns about potential supply disruptions linked to a US blockade of Venezuelan oil tankers.
Brent crude futures slipped 0.3% to $59.63 per barrel, while West Texas Intermediate retreated 0.1% to $55.97.
US president Donald Trump said on Thursday that he believed talks aimed at ending the war in Ukraine were “getting close to something”, ahead of a meeting between US and Russian officials scheduled for the weekend.
Elsewhere, uncertainty remains over how Washington would enforce Trump’s order to block sanctioned tankers entering and leaving Venezuela, which accounts for about 1% of global oil supply. In an unprecedented step, the US Coast Guard last week seized a Venezuelan oil tanker.
“Uncertainty over enforcement details and optimism that a potential US-led Ukraine peace deal could still emerge [are] easing global supply concerns and tempering geopolitical risk premiums,” said Tony Sycamore, an analyst at IG.
Read more: UK government borrowing falls but still exceeds expectations
Analysts said that any additional measures targeting Russian oil exports would pose a greater risk to global supply than the proposed blockade of Venezuelan tankers.
Analysts at Bank of America (BAC) said lower oil prices were likely to curb supply growth, which could help prevent a sharper decline in prices.
Sterling came under pressure against the dollar in early European trading on Friday after UK retail sales unexpectedly fell, raising concerns about the strength of the domestic economy.
The pound was down 0.1% against the dollar, trading at $1.3374, and 0.1% higher versus the euro, trading at €1.1416.
The US dollar index (DX-Y.NYB), which tracks the greenback against a basket of six major currencies, was up 0.2% at 98.64.
UK retail sales volumes are estimated to have declined by 0.1% in November, according to the Office for National Statistics, adding to worries that uncertainty ahead of the 26 November budget weighed on economic activity.
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Losses in sterling were limited after data showed that government borrowing fell to a four year low in November, supported by stronger tax receipts. The Office for National Statistics said borrowing, defined as the gap between total public sector spending and income, dropped to £11.7bn in November, £1.9bn less than a year earlier and the lowest level for any November since 2021.
In equities, the FTSE 100 (^FTSE) was higher on Friday morning, up 0.1% to 9,850 points. For more details on market movements, check our live coverage here.
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