Gold futures are targeting $1,800 as a weaker US dollar and falling Treasury yields supported the yellow metal on Friday. Gold prices have been performing well this week, thanks to expectations that the Federal Reserve will slow down the pace of interest-rate hikes. Can gold begin a new rally?
January gold futures surged $14.40, or 0.82%, to $1,768.10 per ounce at 13:00 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold prices are on track for a weekly gain of nearly 5%, paring their year-to-date loss to below 4%.
Silver, the sister commodity to gold, is struggling for direction. December silver futures dipped $0.017, or 0.08%, to $21.685 an ounce. The white metal will also post a weekly gain of nearly 4%, lowering its 2022 loss to around 7%.
The biggest factor on Friday was a tumbling greenback, as it continues to experience a selloff following the October inflation reading, which came in at a less-than-expected 7.7%.
The US Dollar Index (DXY), which gauges the greenback against a basket of currencies, plunged 1.28% to 106.82, from an opening of 108.21. The index will suffer a weekly loss of about 3.6%, paring its monster year-to-date rally to below 12%.
A weaker buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.
The US Treasury market was mostly in the red, with the benchmark ten-year yield down 33.1 basis points to 3.811%. The one-year bill declined 13.7 basis points to 4.606%, while the 30-year bond fell 26 basis points to 4.059%.
A lower rate environment is good for the metals market because it reduces the opportunity cost of holding non-yielding bullion.
According to the CME FedWatch Tool, investors are betting that the US central bank will raise interest rates by 50 basis points rather than the previously expected 75 basis points. Because inflation is showing signs of easing, traders think the Fed will have enough evidence to ease its tightening cycle.
This allowed the financial markets to record their best single-session performance since 2020.
Meanwhile, all eyes will be on the University of Michigan’s Consumer Sentiment Index, which is expected to drop to 59.5 in November. But observers will monitor the one- and five-year inflation expectations, which are expected to come in at 2.9% and 5.1%, respectively.
In other metal commodities, January copper futures rallied $0.142, or 3.78%, to $3.90 per pound. January platinum futures were flat at $1,054 an ounce. January palladium futures climbed $86.30, or 4.42%, to $2,040.50 per ounce.