Silver was barely below Thursday’s record high, while gold prices remained near a seven-week high on Friday amid expectations of additional interest rate reductions next year following the US Federal Reserve’s pushback against hawkish market forecasts.
After reaching its highest level since October 21 on Thursday, spot gold fell 0.3% to $4,270.89 per ounce by 0524 GMT, but it was on course for a 1.8% weekly gain. The dollar was expected to decline for the third consecutive week, lowering the price of bullion for foreign buyers.
According to ANZ analyst Soni Kumari, “Gold is looking pretty good, and investors are taking cues from the fact that the market is still pricing two rate cuts next year even though the dot plot suggested just one. Investors interpreted the Fed’s statement and Chair Jerome Powell’s remarks as less hawkish following the Fed’s announcement of its third 25-basis-point rate cut of the year on Wednesday. Officials stated that any additional easing would depend on more definite indications of declining inflation and a softer labor market.
Last week saw the largest increase in US unemployment claims in almost four and a half years, but the increase was not interpreted as an indication of a significant improvement in the state of the labor market. Gold and other non-yielding assets often do well in low-interest-rate settings, and investors are now anticipating the US non-farm payrolls report next week for more information about the Fed’s policy direction.
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