Gold races for best week since March 2020 on Fed slowdown hopes


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Gold prices extended gains to a near three-month high on Friday and were heading for their best week in over 2-1/2 years, as signs of cooling U.S. inflation bolstered bets that the Federal Reserve would be less hawkish on rate hikes going forward.

Spot gold gained 0.7% to $1,766.39 per ounce by 14:28 p.m. ET (1928 GMT), after hitting its highest since Aug. 18 earlier in the session. Bullion is up over 5% so far this week.

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U.S. gold futures settled up 0.9% at $1,769.4.

“We are seeing a follow-through in gold prices on yesterday’s CPI data, a weaker dollar and the likelihood that the Fed is going to do a half-point rate hike versus the 75-basis point hike,” said Bob Haberkorn, senior market strategist at RJO Futures.

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U.S. consumer prices rose less than expected in October and data showed annual inflation below 8% for the first time in eight months.

The inflation data triggered a sharp fall in the U.S. dollar, which was headed for its biggest two-day drop in almost 14 years, making gold more appealing for other currency holders.

Markets are now pricing in a 71.5% chance of a 50-basis point rate hike at the Fed’s December meeting, up from around 50/50 a week ago.

“The precious metals bulls are charged up late this week as their near-term technical postures have turned bullish at the same time the U.S. dollar index and U.S. Treasury yields are dropping,” Jim Wyckoff, senior analyst at Kitco Metals, said.

Gold is trading above its 50-day and 100-day moving averages, which is considered a bullish signal by traders.

Elsewhere, spot silver slipped 0.3% to $21.6 per ounce, but was poised for its second straight weekly rise having hit its highest since June.

Platinum fell 0.4% to $1,027.62 and was headed for its fourth consecutive weekly gain as it touched a high since March earlier. Palladium climbed 2.8% to $2,019 and was on course for a weekly rise. (Reporting by Brijesh Patel and Kavya Guduru in Bengaluru; additional reporting by Swati Verma; Editing by Shounak Dasgupta, Andrea Ricci and Shailesh Kuber)


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