Gold prices surged on Friday as investors reacted to signs of a potential Federal Reserve rate cut in November, pushing the US dollar off recent two-month highs. Spot gold rose 0.7% to $2,647.55 per ounce, while US gold futures climbed 1% to $2,665, reflecting market shifts after US producer prices remained unchanged in September. This data points to a favorable inflation outlook, bolstering the view that a rate cut could be on the horizon.
“Markets are split on how aggressive the Fed’s rate cuts will be in the months ahead,” remarked Giovanni Staunovo, an analyst at UBS. Thursday’s data also showed a slight rise in US consumer prices, but with the smallest annual inflation increase in over three years, indicating the economy may be primed for additional cuts.
The CME FedWatch tool now shows an 84.4% chance of a 25-basis-point rate cut in November, with only a 15.6% probability of rates holding steady. This easing trend could lead to more favorable conditions for gold, with Staunovo noting, “While gold prices may remain volatile, further rate cuts should ultimately drive prices higher.”
Although gold has dipped from a record high of $2,685.42 reached last month, it has seen renewed interest as markets adjust expectations. In India, premiums on physical gold made a comeback as the upcoming festival season spurred jewelry purchases.
Other precious metals also saw gains: silver rose 0.7% to $31.41 per ounce, platinum climbed 1.2% to $979.20, and palladium firmed by 0.2% to $1,071, heading toward a 6% increase for the week. With cooling inflation and ongoing rate-cut expectations, precious metals are showing resilience amid a dynamic economic landscape.
