Gold Prices Rise Weekly Amid Dollar Weakness, Rate Cut Expectations Diminish
Gold prices rose during trading on Friday, marking significant weekly gains, as the US dollar continued to weaken. This increase occurred despite Federal Reserve officials' statements that reduced investor optimism regarding a potential rate cut next month.
As of 01:27 GMT, the spot price of gold was up 0.2% to $4180.57 per ounce, achieving a total increase of 4.5% for the week. Conversely, December gold futures dipped by 0.3%, settling at $4183.40 per ounce.
The dollar index, which gauges the US dollar against a selection of other currencies, has declined for the second consecutive week, making gold a more attractive investment option for those holding foreign currencies.
Nevertheless, these gains were moderated by a cautious outlook on interest rates, with a growing number of Federal Reserve officials expressing hesitance to relax monetary policy due to persistent inflation concerns, despite two rate cuts earlier this year.
In this context, Fed Chairman Jerome Powell emphasized the need for "caution before considering any further cuts this year, given the lack of sufficient economic data," following last month's 25 basis point rate cut.
Market expectations have shifted accordingly, with traders now anticipating only a 51% likelihood of a quarter-point rate cut next month, a decrease from 64% in the previous session.
It is important to note that gold, as a non-yielding asset, typically performs better in low-interest-rate environments and during times of economic uncertainty. The recent resumption of US government operations after a 43-day shutdown, which raised investor concerns and disrupted economic data flow, has contributed to the prevailing uncertainty.
In related market activity, silver prices increased by 0.6% to $52.64 per ounce, while platinum also rose by 0.6% to $1589.80, and palladium gained the same percentage, reaching $1435.20 per ounce.
