Gold prices rise as dollar falls, but weekly loss expected

REUTERS: Gold prices rose on Friday, buoyed by a slight dip in the US dollar and rising geopolitical tensions, but remained on track for a weekly decline as markets awaited key US data for further insights into the Federal Reserve’s monetary policy direction.

Spot gold increased by 0.7 per cent to $2,660.03 per ounce, as of 0236 GMT. However, bullion was down 2 per cent so far this week.

US gold futures rose 0.8 per cent to $2,659.70.

The dollar index eased by 0.2 per cent, boosting gold’s appeal for holders of other currencies.

“The escalating geopolitical tensions are prompting investors to flock to gold in hopes of capitalising on potential price increases,” said Brian Lan, managing director at Singapore-based dealer GoldSilver Central, adding, “The slight weakening of the dollar has helped gold prices rise.”

The Israeli military said its air force struck a facility used by Hezbollah to store mid-range rockets in southern Lebanon on Thursday, amid mutual ceasefire breach accusations.

Additionally, Russia on Thursday unleashed its second major attack this month on Ukraine’s energy infrastructure, triggering widespread power cuts across the country.

Bullion is traditionally seen as a safe investment during periods of economic and geopolitical uncertainty, such as conventional or trade wars.

Gold prices could test or dip below the key $2,600 level, with the metal likely to remain in a consolidation phase through December, Lan added.

Markets are pricing in a 66.5 per cent chance of a 25-basis-point rate cut by the Federal Reserve in December, according to the CME Fedwatch tool, potentially marking the third cut of 2024.

Major US data releases next week, including job openings, the ADP employment report, and the employment report, are expected to provide further cues about the Fed’s rate cut outlook.

Spot silver added 1.1 per cent to $30.58 per ounce, platinum gained 0.9 per cent to $939.75, and palladium advanced 0.9 per cent to $984.25. All three metals were set for weekly declines.

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