Gold Prices Climb to a One-Month High

The Rise in Gold Prices Continues

Gold prices are gaining value on Friday, moving towards the best week in the last month. With the end of the U.S. government’s six-week shutdown, investors are trying to cope with the uncertainty in upcoming data.

Performance of Gold Bars

Gold bars are trading above $4,200 per ounce, progressing toward a weekly gain of %5 and offsetting losses from previous sessions. The weak economic outlook has increased expectations for U.S. interest rate cuts, creating a supportive environment for the non-yielding precious metal. Additionally, silver prices have also gained more than %10 over five days, approaching the record set last month.

Technical Support and Liquidity Expectations

Behind the weekly rise, a technical model may have been effective as brokerage firms selling cheap options have purchased gold futures to maintain their positions. Gold bars continue to gain strength from expectations that the Fed will inject more liquidity into the financial system. Roberto Perli, who manages the System Open Market Accounts at the New York Fed, stated this week that the Fed does not have to wait long to begin asset purchases to maintain desired liquidity levels.

Market Expectations and Fed Tactics

Last month, Fed officials announced that they would halt their decision to reduce their balance sheets, or decrease liquidity, due to volatility in short-term funding markets as of December 1. On the other hand, the market is uncertain whether the intense data flow in the coming days will necessitate a new interest rate cut, following Washington’s return from its historic shutdown. As the week progresses, expectations have diminished, and it has been observed that Fed officials are reluctant to lower borrowing costs. Minneapolis Fed President Neel Kashkari remains uncertain about the next month’s interest rate decision, while Cleveland Fed President Beth Hammack argued that rates should be kept steady.