The dollar dropped to its lowest level in more than a year on Friday as markets reduced expectations of more U.S. interest rate hikes. This helped gold prices post their greatest weekly gain since April.
By 0319 GMT, spot gold remained stable at $1,961.79 per ounce and was up about 2% for the week. To $1,965.80, U.S. gold futures increased by 0.1%.
The dollar index hit its lowest point since April 2022, making gold less expensive for foreign investors.
According to Matt Simpson, a senior market analyst at City Index, gold has potential to sort of increase from here. He added that the next significant levels may be between $1,985 and $2,000.
Data released on Thursday revealed that U.S. producer prices hardly increased in June, adding to the growing body of evidence that the economy has entered a disinflationary period.
In the meantime, unexpectedly fewer Americans than expected last week filed new applications for unemployment benefits, showing the U.S. labour market remained tight.
Governor of the Federal Reserve Christopher Waller stated on Thursday that the July meeting should result in an increase in interest rates and that he is not yet prepared to declare the U.S. inflation situation to be under control.
The Federal Open Market Committee (FOMC) is expected to raise rates again at its meeting on 25–26 July, according to interest rate futures, but prospects of more hikes have decreased.
However, Simpson continued, “that could cause some nervousness (among gold investors) if the Fed does indicate more rate increases.”
In times of political and financial unpredictability, gold is regarded as a secure investment, but increasing interest rates raise the opportunity cost of owning non-yielding bullion.
Spot silver, one of the precious metals, was unchanged at $24.8402 per ounce and on track to post its highest weekly rise since March.
Palladium fell 1.1% to $1,280.95 and platinum lost 0.2% to $971.11, but both metals were on track to gain for a second consecutive week.