Spot gold prices rose 1.1%, to $4,255.59/ounce at 10:44 a.m. Eastern time (15:44 GMT), and are on track to record a 0.5% increase for the whole week. US gold futures for February delivery also increased by 1%, to 4,286.9 USD/ounce.
The market is increasingly confident that the central bank will cut interest rates. Reacting to that, the US dollar has weakened slightly and this supports gold prices, said Bart Melek, global commodity strategist at TD Securities.
USD Index (.DXY) fell 0.1%, making gold more attractive to buyers using other currencies. Low interest rates are often beneficial for gold - an asset that does not yield.
US economic data showed that the core personal consumption expenditure (PCE) price index increased by 0.3% in September, while annual inflation decreased to 2.8% from 2.9% in August. Previously, the private sector employment data also recorded the sharpest decline in more than two and a half years.
P upscale statements from some US Federal Reserve (Fed) officials further increased expectations of monetary policy easing. According to CME's FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points at the December 9-10 meeting is up to 87.2%.
Mr. Alex Ebkarian - Executive Director (COO) of allegiance Gold - said that gold prices are expected to fluctuate between 4,200-4,500 USD/ounce this year and 4,500-5,000 USD/ounce next year, depending on the Fed's decisions.
Meanwhile, physical gold demand in India and China has stagnated this week, as buyers await an adjustment in spot delivery prices.
Silver prices rose sharply by 3.6% to $59.19 an ounce, up 4.7% for the week, after hitting a previous record of $59.32 in the session.
Siliver is following the trajectory of gold and many investors still think that silver is quite cheap considering the correlation, said Mr. Melek, adding that the situation of structural deficits and increased demand for the electrification process are factors supporting prices.
Silver has gained 104% since the start of the year, driven by a shortage of supply and its inclusion in the US list of strategic minerals.
During the session, platinum prices increased slightly by 0.2% to 1,648.85 USD, while palladium increased by 0.8% to 1,460 USD.
Note: The world gold market operates through two main pricing mechanisms. The first is the spot delivery market, where prices are quoted for transactions and spot deliveries.
Second is the futures contract market, which sets prices for future deliveries. Due to year-end book-taking activities, December gold contracts are currently the most actively traded on CME.
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