Gold prices rose on Friday and headed for their first weekly gain in four years as U.S. economic data pointed to softening price pressures, fueling optimism that the government is about to cut rates. of the Federal Reserve.
Spot gold was up 0.2% at $2,306.89 per ounce at 0334 GMT. The metal has gained 0.5% so far for the week.
U.S. gold futures rose 0.2% to $2,322.00.
“Data supporting Fed rate cuts over the last couple of days on the sidelines, despite confusing Fed meeting communications, has caused some volatility in the gold market,” said Kyle Rodda, financial markets analyst at Capital.com.
“The best prescription for gold would be continued weakness in inflation, whereby gold’s recessionary appeal will begin to manifest itself as a sort of extension of expectations of potential rate cuts this year.”
Data on Thursday showed U.S. producer prices fell unexpectedly in May, another indication that inflation is easing after a first-quarter surge.
The data followed a colder-than-expected CPI report released shortly before Wednesday’s Fed meeting, in which the central bank kept interest rates steady and pushed back the start of rate cuts to perhaps December.
Inflation data this week, along with US jobless claims data, showed some weakening in price pressure and suggested the labor market is losing momentum, keeping rate cut hopes alive in September by the Federal Reserve.
Traders currently see a 67% chance of a cut in September, according to CME Groups’ FedWatch tool.
Lower interest rates reduce the opportunity cost of holding unprofitable bullion.
In other metals, spot silver rose 0.3% to $29.08 an ounce, platinum rose 0.9% to $955.32 and palladium gained 0.8% to 890 $.28. All three metals were headed for a weekly loss.
