Gold Prices Rise Weekly Amid Dollar Weakness Despite Interest Rate Hike Expectations
Gold prices rose on Friday, marking notable weekly gains as the US dollar weakened, despite limited effects from comments by Federal Reserve officials that tempered investor expectations for a rate cut next month.
As of 01:27 GMT, spot gold was up 0.2% at $4,180.57 per ounce, reflecting cumulative gains of 4.5% for the week. In contrast, December gold futures saw a slight decline of 0.3% to $4,183.40 per ounce.
The dollar index, which measures the performance of the US currency against a basket of competitors, experienced a decline for the second consecutive week, enhancing gold's appeal as an alternative investment for holders of other currencies.
However, these gains occurred amid a pessimistic outlook on interest rates, as a growing number of Federal Reserve policymakers indicated a "cautious approach to monetary easing," attributing this to ongoing inflation concerns despite two rate cuts this year.
In this context, Chairman Jerome Powell urged caution regarding further cuts this year, citing a lack of available economic data, following a 25 basis point reduction last month.
These comments directly influenced market expectations, with traders currently assigning a 51% probability to a quarter-point rate cut next month, down from 64% in the previous session.
It is important to note that gold, as a non-yielding asset, tends to perform better in low-interest-rate environments and during times of economic uncertainty. The recent resumption of US government activities after a 43-day shutdown, which unsettled investors and disrupted the flow of economic data, added to the prevailing uncertainty.
In related developments, silver prices rose 0.6% in spot trading to $52.64 per ounce, while platinum and palladium also increased by 0.6% to $1,589.80 and $1,435.20 per ounce, respectively.
