Commodity Market: Gold heads for fifth straight weekly gain on Fed rate hike slowdown hopes

Spot Gold looked set to register its fifth consecutive week of gains and traded near a nine-month peak on hopes the Federal Reserve may slow the pace of interest rate hikes.

“Fed policy calibration thematic amid signs of more entrenched disinflation pressures is a key factor underpinning gold strength,” OCBC FX strategist Christopher Wong was quoted as saying by Reuters.

A survey conducted by the same media concluded that the Federal Reserve might end the cycle of policy tightening after two 25 basis point rate hikes at its upcoming two meetings, after which the central bank might put rates on hold for the remainder of the year.

“It is possible for gold to hit $2,000 this year, but for that we need to see a downshift in hawkish tone from the Fed to confirm current market rate-hike expectations,” IG Markets strategist Yeap Jun Rong said.

With interest rates likely not going much higher, international investors will probably prefer transitioning from interest-yielding assets to Gold, which does not pay any interest.

As of 8:50 GMT on Friday Spot Gold was edging down 0.13% to trade at $1,929.82 per troy ounce. Earlier during Friday trade, the precious metal went up as high as $1,937.58 per troy ounce, which has been its strongest price level since April 22nd 2022 ($1,955.71 per troy ounce).

Gold has advanced 0.50% so far this week, following another 2.90% gain in the previous week.

Gold futures for delivery in February were edging up 0.33% on the day to trade at $1,930.25 per troy ounce, while Silver futures for delivery in March were up 0.84% to trade at $24.070 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was inching up 0.08% to 102.135 on Friday. Earlier this week, the DXY went down as low as 101.528, which has been its weakest level since May 31st 2022 (101.414).