Precise Investors


Gold set for second weekly gain amid Fed rate cut hopes


Spot gold held ground at $1,992.73 per ounce, bullion has increased 0.7 per cent this week, while U.S. gold futures were little changed at $1,993.60

Gold held steady on Friday, set for its second successive weekly gain, supported by a weaker U.S. dollar as markets grew confident that the Fed was done with its interest rate hikes.

Spot gold was at $1,992.73 per ounce, as of 0431 GMT. Bullion has increased 0.7 per cent this week. U.S. gold futures were flat at $1,993.60.

The theme in financial markets over the last week has been declining yields and a dropping U.S. dollar, and (these) are conducive for gold to move up, said KCM Trade Chief Market Analyst Tim Waterer.

The dollar index was on track for a second weekly decline, making gold less expensive for other currency holders.

Markets have dialled back expectations of Fed rate cuts in 2024 after data showed number of Americans filing new claims for unemployment benefits dropped more than expected last week.

Nevertheless, the stronger than expected jobs data didn’t change the view that the labour market is slowing in the U.S. amid higher rates.

Earlier this week, the Fed minutes showed the central bank would proceed “carefully” and “all participants judged it appropriate to maintain” the current rate setting.

Traders broadly expect the Federal Reserve to leave rates unchanged in December, while pricing in around a 26 per cent possibility of a rate cut as early as March, as per CME’s FedWatch Tool.

There is that disconnect between market expectations for rates and what the Federal Reserve minutes showed and that is what’s causing some hesitation in the price of gold, Waterer added.

Lower rates reduce the opportunity cost of holding gold.

Spot gold may retest a resistance at $1,999 per ounce, a break above which could lead to a gain into $2,009-$2,016 range, as per Reuters technical analyst Wang Tao.

Spot silver added 0.2 per cent to $23.71 per ounce, palladium gained 0.3 per cent to $1,049.12. Platinum eased 0.1 per cent to $914.68, but was heading for its second weekly gain.

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