Gold Advances as Weaker Dollar Takes a Bow on US Rate Pause Hopes

GOLD - NEW YORK. Gold prices bounced back above the key $2,000 level on Friday as it heads for its second consecutive weekly gain, with bullion getting a boost from a drop in the U.S. dollar and bets the U.S. Federal Reserve might soon end its interest rate-hiking cycle.

Spot gold was up 0.5% at $2,001.39 per ounce as of 10:00 a.m. ET (1500 GMT), and has risen 1.2% so far this week. U.S. gold futures gained 0.5% at $2,002.30.

The dollar index has been deteriorating due to the weaker data coming out this week which should shift the Fed to a more dovish pivot and then that could be a tailwind for gold in 2024, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

The dollar index fell 0.3% and was on track for a second weekly drop as traders dialled back expectations of Fed rate cuts in 2024.

"After all, the latest economic data have been rather disappointing," Commerzbank said in a note.

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Commerzbank expects the first rate cut to be implemented in the middle of next year, so only then is the price of gold likely to climb lastingly above $2,000.

Traders widely expect the Fed to leave rates unchanged in December, while pricing in about a 50% chance of a rate cut as early as May, according to CME's FedWatch Tool.

Lower interest rates typically boost gold as it diminishes the opportunity cost of holding non-interest-bearing assets.

Spot silver gained 2.2% to $24.17 per ounce, while platinum rose 1.8% to $932.17, heading for its second weekly gain. Palladium was up 1.7% at $1,063.28 per ounce.