Gold prices saw a modest increase on Friday, with a positive trajectory for the week driven by a weakening dollar. Spot gold was up 0.4% at $1,188.93 per ounce, while U.S. gold futures for December delivery held steady at $1,191.90 per ounce. The dollar index was on track for its second consecutive weekly decline, making gold a more attractive investment for holders of other currencies.
The boost in gold prices this week can be attributed to a combination of dollar depreciation and speculative investments anticipating a potential interest rate cut by the U.S. Federal Reserve. Brian Lan, Managing Director of GoldSilver Central, highlighted the impact of the weakening dollar and the influx of speculative flows on the precious metal. However, recent comments from Fed officials suggesting a reluctance towards implementing an interest rate cut in December led to a slight pullback in gold prices. Concerns about inflation and signals of stability in the labor market post-rate cuts have tempered expectations for aggressive easing by the Fed.
Traders are currently gauging a 51% likelihood of a quarter-point rate cut in the upcoming month, down from 64% in the previous session. Non-yielding gold tends to perform well in a low-interest-rate environment, especially during times of economic uncertainty. The reopening of the U.S. government post a 43-day shutdown has alleviated investor worries and restored the flow of economic data.
Alongside the rise in gold prices, silver also experienced an upsurge of 1.2% to $52.95 per ounce, heading towards its best week since September 2024 with a 9.6% increase. Platinum and palladium followed suit, gaining 1% to $1,596.24 and 1.2% to $1,443.55 per ounce, respectively.
In summary, gold prices have been buoyed by a weaker dollar this week, with an ongoing debate among investors about the Fed's future interest rate decisions. The performance of precious metals, including silver, platinum, and palladium, has been positive, reflecting the current market sentiments and economic conditions. As traders continue to monitor the Fed's stance, the outlook for gold remains sensitive to future policy changes and economic indicators.
