Gold gains as bets of US interest rate hike dip

Gold prices rose today, Friday, heading towards achieving gains for the fourth week in a row, supported by the weakness of the dollar and expectations of the Federal Reserve (the US central bank) raising interest rates at a slower pace.

According to Reuters, gold rose in spot transactions by 0.1 percent to $ 1898.57 an ounce at 0234 GMT. Its prices have risen 1.8 percent so far this week

As for US gold futures, it rose 0.1 percent to $1,899.60.

The dollar index is on its way to recording the worst weekly performance since November 11, 2022. The weakness of the dollar makes gold more attractive to buyers abroad.

Data on Thursday showed that consumer prices in the United States fell for the first time in more than two and a half years in December, giving hope that inflation is on a sustainable downward trend.

“Gold usually goes up when inflation picks up,” said Edward Meir, metals analyst at Marks. But we see gold continuing to rise despite the slowdown in inflation because the market is looking for a lower dollar and a smaller increase in interest rates.”

He added, “Prices are facing some resistance around the $1,900 level, so it may not continue to rise, but there may be some selling at these levels.”

The yellow metal is seen as a hedge against inflation, but high interest rates increase the opportunity cost of holding gold, which does not yield a return.

Philadelphia Federal Reserve Chairman Patrick Harker said Thursday that while the central bank needs to raise interest rates more to calm inflation, it will likely do so at a much slower pace. And President of the Board in Atlanta, Rafael Bostick, said that inflation data may allow him to reduce the pace of raising interest rates to a quarter of a point at its next meeting.

The US Central Bank raised interest rates by 75 basis points four times in the past year, before slowing their pace to 50 basis points in December.

In terms of other precious metals, silver rose in spot transactions 0.1 percent to 23.79 dollars, while platinum rose 0.1 percent to 1068.79 dollars, while palladium fell 0.6 percent to 1780.91 dollars. All three metals are heading towards a weekly decline.