Gold prices edged higher on Friday, set for a second consecutive weekly gain, as the US dollar tumbled and recent economic data prompted bets that the Federal Reserve is nearing the end of its rate-hike cycle.
Spot gold was up 0.2% at $2,044.09 per ounce, as of 0355 GMT, hovering near a one-year high reached on Thursday. US gold futures rose 0.2% to $2,059.40.
The dollar index slid to a one-year low, making bullion cheaper for buyers holding other currencies. “The appetite to sell the US dollar in the wake of soft inflation data, lower yields and calls for a lower terminal Fed rate have been a huge driver for gold,” said Matt Simpson, a senior market analyst at City Index.
Data this week showed the US producer price index in March dropped the most since April 2020, while the consumer price index rose less than expected.
Moreover, the number of Americans filing new claims for unemployment benefits increased more than expected last week, signalling labour market conditions were loosening as higher borrowing costs dampened demand in the economy.
These readings, along with fears of a mild recession, have helped bullion gain about 1.8% so far this week.
The CME FedWatch tool shows markets are pricing in a 66.8% chance of a 25 basis-point hike in May, with rate cuts seen in the back half of the year.
“All eyes will be on US retail sales, consumer sentiment and inflation expectations today,” said Simpson, adding gold could head towards its all-time high, should the data come in soft enough.
Gold is considered a hedge against inflation and economic uncertainties, but higher interest rates dim non-yielding bullion’s appeal.
“Silver prices moved in tandem with gold,” ANZ said in a note.
Spot silver climbed 1% to $26.04 per ounce, hitting a one-year peak, while platinum gained 0.8% at $1,055.14. Both metals were bound for a fifth straight weekly gain. Palladium added 0.6% at $1,508.57.