Gold poised for third weekly gain as cooler data cements Fed cut bets

GOLD prices looked set to mark a third straight weekly rise on Friday, after data showing cooling inflation cemented bets for a rate cut in the US, with traders now looking forward to comments from Federal Reserve’s Chair Powell later in the day.

Spot gold rose 0.2 per cent at US$2,039.63 per ounce by 0301 GMT, after marking an over US$60 rise in November - its second straight monthly rise.

US gold futures for February delivery rose 0.1 per cent to US$2,059.30.

Data on Thursday showed US consumer spending rose moderately in October, while the annual increase in inflation was the smallest in more than 2-1/2 years.

The dollar index fell by 0.2 per cent, after clocking its weakest monthly performance in a year in November, despite a 0.6 per cent jump overnight.

A weaker dollar makes gold less expensive for other currency holders.

Yields on 10-year Treasury notes also ticked lower.

Cooling inflationary pressures, and an easing labour market make case for an end to the Federal Reserve’s interest rate hiking campaign and a possibility of rate cuts in the months ahead, a rhetoric that two Fed officials also flagged this week.

Traders have advanced their bets for a rate cut by the US central bank from about an 80 per cent chance in May to a one-in-two chance in March, CME’s FedWatch Tool shows.

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Gold hits near 7-month peak as dollar, yields weaken on Fed rate cut bets

Lower interest rates reduce the opportunity cost of holding non-interest-bearing bullion.

Spot silver was steady at US$25.24 per ounce. Platinum was down 0.3 per cent to US$924.17. Palladium rose 0.6 per cent to US$1,013.84 per ounce. REUTERS