Gold prices edged higher on Friday and were poised for a weekly rise, supported by a weaker dollar, although gains were kept in check by hawkish comments from U.S. Federal Reserve officials dousing hopes of an interest rate cut in December.
Spot gold was up 0.4% at $4,188.93 per ounce, as of 0200 GMT. Bullion is up 4.8% so far this week. U.S. gold futures for December delivery were steady at $4,191.90 per ounce.
The dollar index was headed for a second straight weekly fall against its rivals, making gold more attractive for other currency holders.
“This week, gold has done well and it’s mainly because of a bit of a weakening of the dollar and also the speculative flows coming in expecting the Fed to lower interest rates,” GoldSilver Central MD Brian Lan said.
“However, the U.S. government has opened and because of all these slowdown and inflation fears, the expectations shifted slightly to that the Fed might not be looking to cut rates aggressively and this caused a slight pullback in gold prices.”
Citing worries about inflation and signs of relative stability in the labour market after two rate cuts this year, a growing number of Fed policymakers are signalling reticence on further easing.
Last month, the Fed lowered rates by 25 basis points, but Chair Jerome Powell signalled caution over another reduction this year, in part due to a lack of data.
Traders are currently pricing in a 51% probability of a quarter-point rate cut next month, down from 64% in the previous session, according to CME Group’s FedWatch tool.
Non-yielding gold tends to do well in a low-interest-rate environment and during economic uncertainties.
The U.S. government reopened after a record 43-day shutdown that had worried investors and disrupted the flow of economic data.
Elsewhere, spot silver rose 1.2% to $52.95 per ounce and was on track for its best week since September 2024, up 9.6%.
Platinum gained 1% to $1,596.24 on Friday and palladium gained 1.2% to $1,443.55.
