Gold flirts with record high

Bengaluru — Gold prices were poised for their biggest weekly jump in five months on Friday, hovering near a historic high, as Federal Reserve chair Jerome Powell's remarks cemented midyear rate cut bets, ahead of a key jobs report later in the day.

Spot gold was little changed at $2,157.16/oz at 3.50am GMT, hovering around a record peak of $2,164.09 hit in the previous session.

US gold futures were flat at $2,164.40.

Spot prices have gained more than 3.5% so far this week, on track to log their biggest weekly percentage gain since mid-October, when the Israel-Hamas conflict first escalated. This will also be bullion’s third consecutive weekly climb, if gains hold.

While a spur of short-term speculative activity primarily driven by commodity trade advisers (CTAs) and algorithmic trading prompted the gold rally, it was the expectation of interest rate cuts in the not-too-distant future that was backing it, said Nikos Kavalis, MD at Metals Focus.

Powell said that Fed was “not far” from gaining the confidence it needs in falling inflation to begin cutting rates, which he said are likely to happen in the coming months.

Traders are pricing in three to four quarter-point (25 basis points) US rate cuts, with a 75% chance for the first in June, as per LSEG’s interest rate probability app.

Lower rates boost the appeal of non-yielding bullion.

Another factor on why gold had been so solidly supported in recent weeks was the rally in procyclical asset classes, particularly equities as investors sought to diversify their risk exposure, Kavalis said.

The dollar headed for its sharpest weekly drop of the year, making bullion less expensive for other currency holders.

Market focus will be on key US jobs data due at 1.30pm GMT.

Spot platinum fell 0.3% to $916.30/oz, silver fell 0.1% to $24.29, while palladium rose 0.5% to $1,039.17. All three metals were poised for a weekly gain.

Reuters