Gold prices rose on Friday to their highest levels in nearly three weeks, fueled by growing expectations that the Federal Reserve (the U.S. central bank) will lower interest rates early next year, which in turn pushed the dollar and bond yields lower ahead of anticipated U.S. inflation data.
By 05:13 GMT, spot gold increased by 0.2% to $2048.99 per ounce after reaching its highest level since December 4 earlier in the session. Gold has risen by 1.5% so far this week. U.S. gold futures climbed 0.5% to $2060.50 per ounce.
Kelvin Wong, senior market analyst for the Asia-Pacific region at OANDA, stated, "U.S. Treasury yields are trending down due to increasing expectations that the Federal Reserve will make its first interest rate cut, which is a positive driver for gold prices at the moment." He added, "There is some safe-haven gold buying due to issues in the Red Sea."
The dollar index fell near a five-month low, making gold more attractive to holders of other currencies, while U.S. 10-year Treasury yields hovered near their lowest level since July. According to the CME Group's FedWatch tool, traders anticipate an 83% chance of an interest rate cut by March. Lower interest rates reduce the opportunity cost of holding non-yielding gold.
Regarding other precious metals, silver declined 0.1% to $24.38 per ounce, platinum fell 0.1% to $962.28, and palladium decreased 0.6% to $1206.12. All three metals are heading for gains for the second consecutive week.
