Gold set for best week in four on Fed pause bets

By Anushree Ashish Mukherjee

(Reuters) – Gold prices held steady on Friday but headed for their biggest weekly gain in four as the dollar and Treasury yields weakened amid growing expectations that the U.S. Federal Reserve is done with its monetary policy tightening.

Spot gold was steady at $1,980.20 per ounce by 2:45 p.m. ET (1945 GMT) after rising to a two-week high earlier in the session. Prices were up about 2.2% so far this week.

U.S. gold futures settled down 0.1% at $1,984.70.

“There is a strong potential for gold to continue to rally a bit more but prices have to move a bit lower, before the next leg-up in the rally and perhaps test the $2,000 level at the same time,” said Everett Millman, chief market analyst at Gainesville Coins.

“Data that came out this week cemented the fact that the Fed is likely done with rate hikes, helping gold. Gold’s move will depend on incoming data and market response to the data.”

This week’s data revealed the U.S. consumer price index was unchanged in October and another set of data highlighted that the number of Americans filing new claims for unemployment benefits increased more than expected last week.

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

Lower interest rates exert downward pressure on the dollar and bond yields, enhancing the appeal of non-yielding bullion.

The dollar was on track for a steep weekly drop, while the 10-year Treasury yield also fell. [USD/] [US/]

On the physical front, Indian buyers brushed off record high local prices this week making gold purchases during the Diwali festival week in the country. [GOL/AS]

Spot silver fell 0.1% to $23.72 per ounce, while platinum rose 0.4% to $895.95. Both were up 6.7% so far this week.

Palladium gained 1.4% to $1,052.56 per ounce and headed for its best week in over a year.

(Reporting by Anushree Mukherjee and Ashitha Shivaprasad in Bengaluru. Editing by Jane Merriman and Shounak Dasgupta)