Gold eyes best week in five months ahead of US jobs data

Gold prices were poised for their biggest weekly jump in five months on Friday, hovering near a historic high, as Federal Reserve Chair Jerome Powell’s remarks cemented mid-year rate cut bets, ahead of a key jobs report later in the day.

Spot gold was little changed at $2,157.16 per ounce, as of 0350 GMT, hovering around a record peak of $2,164.09 hit in the previous session.

U.S. gold futures were flat at $2,164.40.

Spot prices have gained more than 3.5% so far this week, on track to log their biggest weekly percentage gain since mid-October, when the Israel-Hamas conflict first escalated. This will also be bullion’s third straight weekly climb if gains hold.

While a spur of short-term speculative activity primarily driven by CTAs (Commodity Trade Advisors) and algorithmic trading prompted the gold rally, it’s very much this expectation of interest rate cuts in the not-too-distant future that’s backing it, said Nikos Kavalis, managing director at Metals Focus.

Powell said that the Fed was “not far” from gaining the confidence it needs in falling inflation to begin cutting rates, which he said are likely to happen in the coming months.

Traders are pricing in three to four quarter-point (25 bps) U.S. rate cuts, with a 75% chance for the first in June, as per LSEG’s interest rate probability app.

Lower rates boost the appeal of non-yielding bullion.

Another factor on why gold has been so solidly supported in recent weeks is the rally in procyclical asset classes, particularly equities as investors seek to diversify their risk exposure, Kavalis said.

The dollar is headed for its sharpest weekly drop of the year, making bullion less expensive for other currency holders.

Market focus will be on key U.S. jobs data due at 1330 GMT.

Spot platinum fell 0.3% to $916.30 per ounce, silver fell 0.1% to $24.29, while palladium rose 0.5% to $1,039.17. All three metals were poised for a weekly gain.