Gold heads for best week since January as rate-hike bets ease
Gold is set for its strongest week since January, up over 6%, as traders trim rate-hike bets and Iran peace hopes ease inflation concerns.
Gold prices extended gains on Friday, climbing more than 1% and heading for their best week since January, as fading expectations of aggressive U.S. rate hikes and easing inflation worries tied to the U.S.-Iran conflict supported the metal.
Spot gold rose 1.6% to $4,308.92 per ounce by 0845 GMT, after touching a seven-week high on Thursday. For the week, prices are up over 6.6%. U.S. gold futures also gained 1.6% to $4,367.90.
Market analysts attribute the rally to a shift in Federal Reserve policy expectations. The implied probability of a September rate hike has dropped to 55%, down from 67% last week, according to the CME FedWatch Tool. Some traders believe Fed Chairperson Warsh may be less hawkish than previously thought.
President Donald Trump told reporters he expects the war with Iran to end "pretty soon," which has contributed to falling crude oil prices. Lower energy costs can ease inflation pressures, reducing the need for higher interest rates. While gold is often seen as an inflation hedge, its appeal weakens in a high-rate environment because it yields no interest.
Investors are now awaiting the U.S. Labor Department's nonfarm payrolls report for July, due at 1230 GMT. A strong jobs report could revive inflation and rate-hike concerns, potentially trimming gold's weekly gains. Analysts note that the metal's 50-day simple moving average may offer support if prices pull back.
UBS forecasts gold to reach $5,000 per ounce by the first half of 2027.
In physical markets, Indian gold discounts widened as retail buyers stayed away after prices hit a more than one-month high, while demand in China also moderated.
Among other precious metals, spot silver climbed 4.5% to $64.26, platinum rose 2.4% to $1,770.20, and palladium gained 2.3% to $1,401.71. All three were on track for weekly gains.