Gold prices rose on Friday after recent data supported bets for an interest rate cut from the Federal Reserve next month, while market participants awaited the price index report at production (PPI) in the United States for further direction.
Spot gold rose 0.5% to $2,641.70 an ounce by 0245 GMT, but was down 0.4% for the week. Prices hit a record high of $2,685.42 last month.
U.S. gold futures gained 0.7% to $2,658.90.
The dollar index fell from its highest level in two months, making bullion more attractive to holders of other currencies. [USD/]
Data on Thursday showed that U.S. consumer prices rose slightly more than expected in September, while jobless claims rose to 258,000 in the week ending Oct. 5, compared with estimates of 230,000. All eyes are now on the PPI data expected at 1230 GMT.
“Gold is seeing near-term gains as recent data has been positive. If the PPI data is worse, gold’s momentum could continue to increase,” said Kelvin Wong, senior market analyst for Asia-Pacific at OANDA.
“From a technical point of view, in the short term, gold could retest $2,657 and if it exceeds it, it could test levels near its all-time high.”
Markets currently estimate an 84.4% chance of a 25 basis point interest rate cut in November and a 15.6% chance that the Fed will hold rates on hold, according to CME’s FedWatch.
Lower interest rates reduce the opportunity cost of holding bullion.
Furthermore, Israeli strikes on central Beirut on the night of Thursday to Friday killed 22 people, according to the Lebanese Ministry of Health.
Analysts noted that an escalation of the situation in the Middle East could further support gold, which is considered a safe asset in times of unrest.
Among other metals, spot silver rose 0.2 percent to $31.25 an ounce and platinum climbed 0.9 percent to $975.65. Both metals were heading for weekly declines.
Palladium rose 1.2% to $1,082.07 an ounce and was up 1% for the week.
