Gold stabilized on Friday and is heading for its second consecutive weekly gain as analysts increasingly bet that the Federal Reserve (the U.S. central bank) has finished raising interest rates, leading to a decline in the dollar. By 11:38 GMT, gold in spot transactions rose 0.1 percent to $1,994.60 per ounce. The yellow metal has increased 0.8 percent this week. U.S. gold futures also climbed 0.2 percent to $1,996.20.
Lukman Otunuga, a senior research analyst at FXTM, stated, "Gold has entered a stabilization phase as investors wait for new clues about the Federal Reserve's outlook on monetary policy. It has been trapped in a narrow range in recent weeks, with all eyes on the $2,000 level." He added, "A new spark may be needed to trigger significant movement."
The dollar index is on track to post its second weekly decline, making gold less expensive for holders of other currencies. Markets have reduced their expectations for interest rate cuts in 2024 after data showed that the number of Americans filing new unemployment claims fell more than expected last week. However, stronger-than-expected employment data has not changed the view that the labor market is slowing in the U.S. amid high interest rates.
Traders widely expect the U.S. central bank to keep interest rates unchanged in December, while approximately 26 percent expect a rate cut possibly as early as March, according to the CME Group's FedWatch tool. Lowering interest rates would reduce the opportunity cost of holding gold.
For other precious metals, silver rose in spot transactions by 0.2 percent to $23.71 per ounce, while palladium increased by 0.2 percent to $1,047.93. Platinum, however, fell by 0.3 percent to $911.88 but is on track for a second consecutive weekly rise.
