Gold hits two-week peak on increased Fed rate-cut bets

GOLD prices rose to a two-week high in early Asian trade on Friday, as bets increased for a US interest rate cut next month amid conflicting signals from Federal Reserve officials.

Spot gold rose 0.6 per cent to US$4,180.89 per ounce by 0100 GMT, hitting its highest level since Nov 14, and was set for a 3 per cent weekly gain.

US gold futures for December delivery were up 0.3 per cent at US$4,215.80 per ounce.

US rate futures are pricing in an 87 per cent chance of a rate cut in December, compared with 85 per cent a day prior, according to the CME’s FedWatch tool.

Comments from San Francisco Federal Reserve Bank President Mary Daly and Fed Governor Christopher Waller this week have bolstered expectations for a rate cut.

Their stance, however, contrasted with several regional Fed presidents advocating a pause until inflation shows a more convincing move towards the 2 per cent target.

Meanwhile, Kevin Hassett, who has emerged as a front runner to replace Jerome Powell as Fed Chair, like US President Donald Trump, has said interest rates should be lower.

Non-yielding gold tends to perform well in low-interest-rate environments.

Trading was thin with US markets closed on Thursday for the Thanksgiving holiday.

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Gold drifts higher on US rate cut expectations

The US dollar was headed for its steepest weekly drop in four months in the previous session as investors bet on further monetary easing, amid pressure from President Trump to cut rates.

Elsewhere, spot silver rose 0.2 per cent to US$53.53 per ounce and platinum gained 0.6 per cent to US$1,617.15, with both up 7.4 per cent for the week. Palladium lost 0.2 per cent to US$1,435.83 but was set for a 4 per cent weekly gain. REUTERS