Gold tracks best week in nearly 2 months on Fed pause hopes

BANGALORE - Gold prices were set for their biggest weekly gain in nearly two months, as a softer US dollar and hopes for a pause in the Federal Reserve’s tightening campaign bolstered bullion’s appeal.

Spot gold was at US$1,980.29 per ounce by 5.35pm Singapore time on Friday. US gold futures were little changed at US$1,995.60.

Bullion has gained 1.7 per cent so far in the week, heading for its best week since the week ended April 7.

Current gold market sentiment remains constructive, and prices could move a little higher from here as the Fed is expected to stay on hold in June, said Marex metals analyst Edward Meir.

Philadelphia Fed president Patrick Harker said on Thursday that US central bankers should not raise interest rates at their next meeting, even though high inflation is coming down at a “disappointingly slow” pace.

Markets now see a 73.7 per cent chance of rates remaining unchanged in June.

Gold, which does not yield any interest of its own, loses appeal when interest rates rise.

The US dollar index dipped to a one week-low, making gold less expensive for buyers holding other currencies.

Meanwhile, the US Senate passed bipartisan legislation backed by President Joe Biden

that lifts the government’s US$31.4 trillion (S$42.2 trillion) debt ceiling,

averting what would have been a historic, first-ever default.

On the data front, investors will keep a tab on the US Labour Department’s non-farm payrolls report this week.

The figures could again sway “market opinion with regard to what the FOMC (Federal Open Market Committee) does next week”, said KCM Trade chief market analyst Tim Waterer.

A strong labour market print could see a bounce-back in the dollar, which would not help gold, Mr Waterer added.

Spot silver ticked 0.1 per cent lower to US$23.96 per ounce and was up 2.7 per cent for the week.

Platinum was at US$1,008.66, and palladium rose to US$1,415.10 – both set for weekly losses. REUTERS