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LONDON: Gold rose over the key $2,000 level on Friday, logging its second consecutive weekly gain, see-sawing against a weaker US dollar on bets that the US Federal Reserve is done with its interest rate-hiking cycle.

Spot gold was up 0.5% at $2,001.97 per ounce by 2:30 p.m. ET (1930 GMT), and has risen over 1% so far this week. US gold futures settled 0.5% higher at $2,003.00.

The dollar index has been deteriorating due to the weaker data coming out this week which should shift the Fed to a more dovish pivot and then that could be a tailwind for gold in 2024, said Phillip Streible, chief market strategist at Blue Line Futures, in Chicago.

The dollar index fell 0.4% and was on track for a second weekly drop on growing expectations the Fed could start cutting interest rates by May next year. “After all, the latest economic data have been rather disappointing,” Commerzbank said in a note.

Commerzbank expects the first rate cut to be implemented in the middle of next year, so only then is the price of gold likely to climb lastingly above $2,000. Traders widely expect the Fed to leave rates unchanged in December, while pricing in about a 64% chance of a cut as early as May, according to CME’s FedWatch Tool.

“We don’t see either a significant move higher or lower in the short run into next year and it becomes more certain that the US central bank is willing to cut interest rates and probably cut interest rates significantly before we reach the 2% inflation target,” said Bart Melek, head of commodity strategies at TD Securities.

Lower interest rates diminish the opportunity cost of holding non-interest-bearing gold. Spot silver gained 2.7% to a 12-week high at $24.3 per ounce. Platinum rose 1.6% to $930.61 and palladium was up 2.2% to $1,068.83 per ounce, both heading for their second weekly gain.

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