Gold prices were set for their second consecutive weekly gain on Friday as demand increased due to expectations surrounding U.S. Federal Reserve interest rates. Meanwhile, palladium, used in auto-catalysts, surged over 8%.
Spot gold was down 0.2% at $2,354.86 per ounce as of 09:31 a.m. ET (1331 GMT). Despite this slight dip, gold has risen 0.9% this week, building on last week’s 1.7% gain. U.S. gold futures remained steady at $2,368.70.
“Gold prices were positive for the week, bolstered by weak CPI numbers and retail sales data. Participants are now looking ahead to important data next week, including New Home Sales, GDP, and Core PCE Price Index in the US. These reports will impact the overall market, influencing both the Dollar and Gold prices,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.
What’s weighing on gold prices?
Data released on Thursday indicated a moderate decline in first-time applications for U.S. unemployment benefits last week, while new housing construction also fell. Combined with sluggish retail sales last month, this sustains the possibility of a rate cut by the Federal Reserve in September.
The market currently anticipates one to two rate cuts of 25 basis points each from the Fed this year. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.
Spot palladium surged 5.5% to $974.25 per ounce, reaching a one-month high earlier in the session. Despite this rise, spot prices remain down 11% for the year, following a 39% decline in 2023. Palladium prices trading above their 21-, 50-, and 100-day moving averages are seen as a bullish signal for technical investors.
In other metals, platinum increased by 1.5% to $992.72 per ounce, while silver dropped 1.9% to $30.13 per ounce. Despite the dip, both metals are on track for weekly gains.
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