Gold Rises on Fed Rate Cut Expectations

Gold Prices are Rising

Gold is trading near its highest level in the last seven weeks on Friday, driven by expectations that the U.S. Federal Reserve will make more interest rate cuts next year.

Price Changes

Spot gold fell by 0.2% to $4,275.44 per ounce. However, it is on track to record a weekly gain of 1.8% after reaching its highest level since October 21 on Thursday.

U.S. gold futures were also set at $4,306.20, down 0.2%.

Impact of Exchange Rates on Investors

The dollar is preparing to close the third consecutive week with a decline; this situation makes gold more attractive to foreign investors.

Analyst Opinions

ANZ analyst Soni Kumari stated, "The outlook for gold is quite positive. While the dot plot only predicts one cut, it seems the markets are pricing in two interest rate cuts next year."

The Fed announced its third 25 basis point interest rate cut of the year during its meeting on Wednesday, with a divided decision. Investors interpreted the released statement and Chairman Jerome Powell's remarks as less hawkish compared to previous meetings. Officials stated that further easing could only occur with a significant cooling in inflation and a weakening in the labor market.

Unemployment Claims and Market Impact

In the U.S., unemployment claims saw the largest increase in about 4.5 years last week, but this does not indicate a significant weakening in the labor market.

Non-yielding assets like gold generally benefit from low-interest rate environments. Investors are waiting for the non-farm payroll data to be released by the Fed next week to gain more insight into the policy path.