Gold prices are poised for a third consecutive weekly climb, reaching $2,042.58 per ounce by 0621 GMT on Friday, up approximately 2% for the week. The surge is attributed to cooling inflation in the U.S., reinforcing expectations of an impending rate cut by the Federal Reserve. Recent data revealing moderate consumer spending in October and the smallest annual increase in inflation in over 2-1/2 years has strengthened the case for the Federal Reserve to conclude its interest rate hiking campaign, increasing the likelihood of rate cuts in the coming months. Traders, responding to the softer inflation data, have significantly raised their bets for a rate cut, as indicated by CME’s FedWatch Tool, from an 80% chance in May to a one-in-two chance in March.
As the dollar index weakened and 10-year Treasury yields edged lower, the appeal of holding non-interest-bearing bullion rose, further contributing to gold’s positive momentum. Market analysts emphasize that Federal Reserve Chair Powell’s impending comments will play a decisive role in shaping the trajectory of gold prices, with traders closely monitoring his remarks to gain insights into the precious metals market’s direction for the rest of the year.