Gold prices rose more than 2% on Friday and are heading for a week of gains, after lower-than-expected US inflation data reignited hopes that the US Federal Reserve (FED) would cut interest rates this year, thereby offsetting concerns arising from stronger-than-forecast jobs data released earlier this week.
Spot gold prices rose 2.1% to 5,041.80 USD/ounce and increased 1.2% since the beginning of the week. Previously, this precious metal had fallen about 3% in Thursday's session, hitting its lowest level in nearly a week.
US gold futures for April delivery closed up about 2%, to 5,046.30 USD/ounce.
Gold, and especially silver, are benefiting from a recovery that relieves pressure, after the January CPI index was slightly lower, easing concerns triggered by a strong job report released on Wednesday," said Tai Wong, an independent metal trader.
Spot silver prices rose 3.4% to $77.70/ounce, recovering after falling 11% in the previous session. However, the metal is still on a downward trend of 0.3% for the whole week.
The US consumer price index (CPI) increased by 0.2% in January, lower than the 0.3% increase that economists predicted, after increasing by 0.3% in December (unadjusted), according to the US Department of Labor.
Market participants currently expect a total of about 63 basis points of interest rate cuts this year, with the first cut forecast to take place in July, according to data compiled by LSEG.
Gold - an asset that does not generate yields - usually works well in a low-interest environment.
Meanwhile, data released on Wednesday showed that the US created 130,000 jobs in January, higher than analysts' forecast of 70,000 jobs.
Gold demand in China remained high before the Lunar New Year holiday, while in India, the market has switched to discounted status.
ANZ analysts raised their Q2 gold price forecast to $5,800/ounce, from the previous $5,400/ounce, citing gold's attractiveness as a "life insurance" asset. However, ANZ also noted that silver - although still supported by strong investment demand - may see recent gains weaken as industrial customers fear high prices.
Spot platinum rose 3.8% to $2,075.93/ounce and palladium rose 3.6% to $1,674.50/ounce. Both metals are heading towards recording a decrease in the week.
