Weaker dollar puts gold on track for second weekly gain

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

Spot gold held ground at $1,992.46/oz, at 2.05am GMT. Bullion has risen 0.7% this week. US gold futures were little changed at $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% 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%.

Markets have dialled back the expectation 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 labour 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% chance of a rate cut as early as March, according to CME’s FedWatch Tool.

“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% to $23.69/oz, palladium rose 0.4% to $1,049.55. Platinum was flat at $915.57, but was heading for its second weekly rise.

Reuters