By Harshit Verma
(Reuters) – 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 is done hiking rates weighed on the dollar and Treasury yields.
Spot gold was up 0.5% at $1,991.48 per ounce, as of 1059 GMT. Prices were up about 2.8% so far this week.
U.S. gold futures were up 0.4% to $1,994.70.
Overall investors are positive on gold 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 May next year after data pointed to slowing inflation.
Data this week showed the U.S. consumer price index was unchanged in October and the core rate was up 0.2%, weaker than anticipated, 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. [USD/]
However, analysts at Commerzbank said in a note that the recovery in gold is not likely to continue, as it will “presumably take some time before the market does a complete about-turn and begins speculating on imminent rate cuts in the U.S..”
Gold will only hold above the $2,000 mark in the middle of next year, Commerzbank added.
Spot silver rose 1.9% to $24.14 per ounce and was up 8.5% for the week so far. Platinum rose 1.3% to $903.81, but has gained 7.6% for the week.
Palladium rose 1.8% to $1,056.26 per ounce, and was heading for its best week in over a year.
(Reporting by Harshit Verma in Bengaluru; Editing by Sharon Singleton)
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