NEW YORK: Gold prices rose more than 2 percent on Friday and were headed for a weekly gain as weaker-than-expected US inflation data reignited hopes for Federal Reserve rate cuts this year, offsetting concerns from stronger-than-expected jobs data earlier in the week.
Spot gold was up 2.1 percent at USD5,022.06 per ounce as of 01:30 p.m. ET (1830 GMT), and up 1.2percent so far this week. Bullion fell about 3percent on Thursday, hitting its lowest in nearly a week.
US gold futures for April delivery settled about 2percent higher at USD5,046.30 per ounce.
“Gold, and particularly silver, is enjoying a relief rally after a mild January CPI reading eased nerves stoked by Wednesday’s strong employment report,” said Tai Wong, an independent metals trader. Spot silver climbed 3.4percent to USD77.70 per ounce, snapping back from an 11percent decline in the previous session. It was on track for a weekly loss of 0.3 percent.
The US Consumer Price Index rose 0.2percent in January, below economists’ expectations of a 0.3percent increase, following an unrevised 0.3percent gain in December, the Labour Department said.
Market participants currently anticipate a total of 63 basis points in rate cuts this year, with the first expected in July, according to data compiled by LSEG. Non-yielding bullion tends to do well in low-interest-rate environments.
Meanwhile, data on Wednesday showed the United States added 130,000 jobs in January, compared with analysts’ estimates of 70,000. China’s gold demand stayed strong ahead of the Lunar New Year, while in India, the market flipped to a discount.
ANZ analysts raised their second-quarter gold forecast to USD5,800/oz from USD5,400, citing its appeal as an insurance asset, while noting that silver, though still supported by strong investment demand, may see its recent out performance fade as industrial buyers balk at higher prices.
Spot platinum rose 3.8percent to USD2,075.93 per ounce and palladium was up 3.6percent at USD1,674.50. Both metals were set to notch weekly losses.
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