Gold is on the rise with expectations of Fed interest rate cuts.

Gold Prices are Rising

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

Price Changes

Spot gold fell by 0.2% to $4,275.44 per ounce. However, it is preparing to record a weekly increase 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 by 0.2%.

Exchange Rates and Their Impact on Investors

The dollar is set to close out the third consecutive week lower, making gold more attractive for foreign investors.

Analyst Opinions

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

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

Unemployment Claims and Market Impact

Unemployment claims in the U.S. saw the largest increase in nearly 4.5 years last week; however, this does not indicate a clear weakening in the labor market.

Non-yielding assets like gold usually benefit from low interest rate environments. Investors are waiting for the non-farm payroll data that the Fed will announce next week to gain more insights into the policy path.