Gold prices rose on Friday after new data reinforced expectations of a Federal Reserve rate cut next month, while investors awaited the U.S. Producer Price Index (PPI) report for further guidance. Spot gold increased by 0.6% to $2,644.16 per ounce as of 0514 GMT, though it was down approximately 0.3% for the week, after reaching a record high of $2,685.42 last month. Meanwhile, U.S. gold futures climbed 0.8% to $2,661.40.
The dollar index dropped from a two-month peak, making gold more appealing to holders of other currencies. Recent data showed U.S. consumer prices slightly exceeded expectations in September, while jobless claims rose to 258,000 for the week ending October 5, compared to estimates of 230,000. Market participants are now focused on the upcoming PPI data due at 1230 GMT.
Read more: Gold Prices in Pakistan Experience Minor Decline
“Gold is experiencing short-term gains as recent data has been favorable. If the PPI data is softer, gold’s upward momentum may persist,” stated Kelvin Wong, OANDA’s senior market analyst for Asia Pacific. He added that technically, gold could retest $2,657, and if it surpasses that level, it may approach its all-time high.
Current market sentiment indicates an 84.4% likelihood of a 25-basis-point rate cut in November, up from 76% before the latest data, with a 15.6% chance of the Fed holding rates steady, according to CME’s FedWatch. Lower interest rates reduce the opportunity cost of holding gold.
In other news, Israeli airstrikes in central Beirut on Thursday night resulted in 22 fatalities, according to Lebanon’s health ministry. Analysts suggest that escalating tensions in the Middle East could further boost gold prices, as it is seen as a safe asset in times of crisis.
Additionally, among other metals, spot silver increased by 0.3% to $31.28 per ounce, and platinum rose 1% to $976.55, both heading for weekly declines. Palladium gained 1% to $1,080.27 and was up nearly 7% for the week.
