Gold steadies; poised for second weekly gain on weaker dollar

GOLD held steady on Friday, set for its second consecutive weekly gain, supported by a weaker US dollar as markets grew confident that the Federal Reserve was done with its interest rate hikes.

Spot gold held ground at US$1,992.46 per ounce, as of 0205 GMT. Bullion has risen 0.7 per cent this week. US gold futures were little changed at US$1,993.40.

“The theme in financial markets over the past week has been falling yields and a falling US dollar, and... (these) are conducive for gold to move higher,” said KCM Trade chief market analyst Tim Waterer.

The dollar index slipped 0.2 per cent against its rivals and was on track for a second weekly drop, making gold less expensive for other currency holders.

The benchmark US 10-year Treasury yields edged up to 4.4568 per cent.

Markets have dialled back expectations of Fed rate cuts in 2024 after data showed number of Americans filing new claims for unemployment benefits fell more than expected last week.

However, the stronger than expected jobs data did not change the view that the labor market is slowing in the US amid higher rates.

Earlier this week, the Fed minutes showed the central bank would proceed “carefully” and “all participants judged it appropriate to maintain” the current rate setting.

Traders widely expect the Fed to leave rates unchanged in December, while pricing in about a 26 per cent chance of a rate cut as early as March, according to CME’s FedWatch Tool.

SEE ALSO

Gold ticks higher as weaker US dollar, yields lend support

“There is that disconnect between market expectations for rates and what the Fed minutes showed and that’s what’s causing some hesitation in the price of gold,” Waterer said.

Lower rates decrease the opportunity cost of holding gold.

Spot silver gained 0.1 per cent to US$23.69 per ounce, palladium rose 0.4 per cent to US$1,049.55. Platinum was flat at US$915.57, but was heading for its second weekly rise. REUTERS