Gold heads for second weekly gain on weaker dollar

Gold stabilized on Friday and is heading to achieve gains for the second week in a row, supported by the weakness of the dollar, with increasing market confidence that the Federal Reserve (the US central bank) has finished raising interest rates.

According to Reuters, gold settled in spot transactions at $1,992.46 per ounce. The yellow metal rose 0.7% this week. There was no significant change in US gold futures contracts, which recorded $1,993.40.

Tim Waterer, chief market analyst at KCM Trade, said, “The prevailing theme in the financial markets over the past week was the decline in yields and the decline of the US dollar… This is helping gold rise.”

The dollar index fell 0.2% against its competitors and is heading towards recording its second weekly decline, which makes gold less expensive for holders of other currencies.

Benchmark 10-year US Treasury bond yields rose to 4.4568%.

Markets reduced their expectations for lower interest rates in 2024 after data showed that the number of Americans filing new applications for unemployment benefits fell more than expected last week.

However, the stronger-than-expected jobs data did not change the view that the labor market is slowing in the United States amid high interest rates.

Traders widely expect the US Central Bank to leave interest rates unchanged in December, while approximately 26% expect a rate cut, perhaps in March at the earliest, according to the CME Group’s FeedWatch tool. ‎

Lowering interest rates would reduce the opportunity cost of holding gold

As for other precious metals, silver rose in spot transactions 0.1% to $23.69 per ounce, palladium increased 0.4% to $1,049.55, and platinum stabilized at $915.57, but is heading for a second weekly rise.