By Brijesh Patel
(Reuters) – Gold prices rose to a near three-month high on Friday and were heading for their best week since July 2020 as signs of cooling U.S. inflation bolstered bets that the Federal Reserve would be less hawkish on rate hikes going forward.
Spot gold was up 0.5% at $1,763.25 per ounce by 09:43 a.m. ET (1443 GMT), after hitting its highest since Aug. 18 earlier in the session. Bullion is up 4.8% so far this week.
U.S. gold futures gained 0.7% to $1,766.20.
“We are seeing a follow through in gold prices on yesterday’s CPI data, a weaker dollar and the likelihood that Fed is going to do a half-point rate hike versus the 75-basis point hike,” said Bob Haberkorn, senior market strategist at RJO Futures.
U.S. consumer prices rose less than expected in October and data showed annual inflation below 8% for the first time in eight months.
The inflation data triggered a sharp fall in the U.S. dollar, which was headed for its biggest two-day drop in almost 14 years, making gold more appealing for other currency holders. [USD/]
Benchmark U.S. 10-year Treasury yields slipped to a one-month low on Thursday. [US/]
Markets are now pricing in a 71.5% chance of a 50-basis point rate hike at the Fed’s December meeting.
“The precious metals bulls are charged up late this week as their near-term technical postures have turned bullish at the same time the U.S. dollar index and U.S. Treasury yields are dropping,” Jim Wyckoff, senior analyst at Kitco Metals, said.
Gold is trading above its 50-day and 100-day moving averages, which is considered a bullish signal by traders.
Elsewhere, spot silver slipped 0.8% to $21.50 per ounce, but was poised for its second straight weekly rise.
Platinum rose 0.3% at $1,035.50, and was headed for its biggest weekly gain since February 2021. Palladium climbed 2.7% to $2,018.13.
(Reporting by Brijesh Patel and Kavya Guduru in Bengaluru; Editing by Shounak Dasgupta)
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