Gold Scales Two-Week High on Expected Fed Pause

GOLD - NEW YORK. Gold prices climbed to a two-week high on Friday and were set to mark their first weekly rise in three as market expectations that the U.S. Federal Reserve has finished raising rates weighed on the dollar and Treasury yields.

Spot gold was up 0.4% at $1,988.90 an ounce by 1235 GMT, having touched its highest since Nov. 3 at $1,993.29. Prices were up about 2.7% over the week.

U.S. gold futures were up 0.3% at $1,992.30.

Investors are positive on gold overall because they are betting against further U.S. interest rate hikes and are pricing in a dovish Fed in 2024, said Carlo Alberto De Casa, market analyst at Kinesis Money.

Lower interest rates decrease the opportunity cost of holding gold, a non-yielding asset used as a hedge against inflation.

The market is now pricing in rate cuts as early as next May after data pointed to slowing inflation.

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Data this week showed the U.S. consumer price index was unchanged in October and the core rate was up by a weaker than expected 0.2% while producer prices fell by the most in three and a half years.

The dollar was on track for a weekly drop, making gold less expensive for buyers holding other currencies, while the 10-year Treasury yield also fell.

However, analysts at Commerzbank said that the recovery in gold is unlikely to continue because it will "presumably take some time before the market does a complete about-turn and begins speculating on imminent rate cuts".

Spot silver rose 1.4% to $24.02 an ounce and was up 8.2% for the week. Platinum rose 1.3% to $903.74, extending its weekl;y gain to 7.7%.

Palladium was up 1.7% at $1,055.68 and on track for its biggest gain in more than a year.