GOLD prices inched down on Friday (Dec 15) but stayed on track for a weekly gain, as prospects of the US Federal Reserve lowering borrowing costs dented the US dollar and Treasury yields, boosting demand for the safe-haven asset.

Spot gold was down 0.1 per cent at US$2,033.29 per ounce, as at 0113 GMT. However, bullion has risen 1.5 per cent so far this week. US gold futures edged 0.1 per cent higher to US$2,047.60.

The Fed left interest rates unchanged on Wednesday and chair Jerome Powell said the historic tightening of monetary policy is likely over, with a discussion of cuts in borrowing costs coming “into view”.

Fed officials estimated 75 basis points (bps) of rate cuts in 2024, with 2.4 per cent inflation at the end of next year. Markets are now pricing in around a 75 per cent chance of a rate cut in March, according to CME FedWatch tool.

Lower US interest rates put pressure on the US dollar and bond yields, and increase the appeal of non-yielding bullion.

The US dollar was heading for a weekly drop after hitting a four-month low on Thursday, making gold less expensive for other currency holders.

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Benchmark US 10-year bond yield, meanwhile, hovered near its lowest level since July.

The European Central Bank pushed back against bets on imminent cuts to interest rates on Thursday by reaffirming that borrowing costs would remain at record highs despite lower inflation expectations.

Data showed US retail sales unexpectedly rose in November. A separate report showed initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 202,000 for the week ended Dec 9.

Spot silver eased 0.3 per cent to US$24.07 per ounce, while platinum fell 0.2 per cent to US$956.21 and palladium slipped 0.4 per cent to US$1,098.13. REUTERS