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Gold Heads for First Weekly Gain in Three on Fed Pause Hopes

FILE PHOTO: Gold bars are pictured at the plant of gold and silver refiner and bar manufacturer Argor-Heraeus in Mendrisio, Switzerland, July 13, 2022. REUTERS/Denis Balibouse//File Photo
FILE PHOTO: Gold bars are pictured at the plant of gold and silver refiner and bar manufacturer Argor-Heraeus in Mendrisio, Switzerland, July 13, 2022. REUTERS/Denis Balibouse//File Photo
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Gold Heads for First Weekly Gain in Three on Fed Pause Hopes

FILE PHOTO: Gold bars are pictured at the plant of gold and silver refiner and bar manufacturer Argor-Heraeus in Mendrisio, Switzerland, July 13, 2022. REUTERS/Denis Balibouse//File Photo
FILE PHOTO: Gold bars are pictured at the plant of gold and silver refiner and bar manufacturer Argor-Heraeus in Mendrisio, Switzerland, July 13, 2022. REUTERS/Denis Balibouse//File Photo

Gold prices extended gains on Friday and were set for their first weekly rise in three, as investors stepped up bets that the US Federal Reserve is done raising interest rates, pressuring the dollar and Treasury yields.
Spot gold was up 0.2% at $1,985.29 per ounce, as of 0745 GMT, after hitting its highest since Nov. 6 in the last session. US gold futures were steady at $1,985.29.
The bullion is up 2.5% so far this week.
"There's probably a couple of set of sequences in which we could see gold push sustainably through $2,000, and that's a very rapid deterioration in the data, which suggests again that rate cuts are on the horizon," said Kyle Rodda, a financial market analyst at Capital.com.
"Alternatively, the war is still bubbling, simmering away in the background," Rodda added.
Data this week showed the US consumer price index was unchanged in October and the core rate was up 0.2%, weaker than anticipated. Producer prices fell by the most in three-and-a-half years.
Meanwhile, the number of Americans filing new claims for unemployment benefits increased more than expected, which could also help the Fed's fight against inflation.
Market participants revised their forecasts for future Fed action.
Lower interest rates decrease the opportunity cost of holding gold, a non-yielding asset used as a hedge against inflation.
The dollar was on track for a weekly drop, making gold less expensive for buyers holding other currencies, while the 10-year Treasury yield hovered near two-month lows.
Spot gold may have resumed its uptrend and may break a resistance at $1,989 per ounce and rise into a range of $1,999-$2,003, according to Reuters technical analyst Wang Tao.
Spot silver rose 0.5% to $23.81 per ounce and was up 7.2% for the week so far, while platinum was flat at $23.81, but has gained 6.2% for the week.
Palladium fell 0.2% to $1,035.54 per ounce, but was heading for its best week in a year.

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US Applications for Jobless Claims Fall to 201,000, Lowest Level in Nearly a Year

A help wanted sign is displayed at a restaurant in Chicago, Ill., Nov. 25, 2024. (AP Photo/Nam Y. Huh, File)
A help wanted sign is displayed at a restaurant in Chicago, Ill., Nov. 25, 2024. (AP Photo/Nam Y. Huh, File)
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US Applications for Jobless Claims Fall to 201,000, Lowest Level in Nearly a Year

A help wanted sign is displayed at a restaurant in Chicago, Ill., Nov. 25, 2024. (AP Photo/Nam Y. Huh, File)
A help wanted sign is displayed at a restaurant in Chicago, Ill., Nov. 25, 2024. (AP Photo/Nam Y. Huh, File)

US applications for unemployment benefits fell to their lowest level in nearly a year last week, pointing to a still healthy labor market with historically low layoffs.

The Labor Department on Wednesday said that applications for jobless benefits fell to 201,000 for the week ending January 4, down from the previous week's 211,000. This week's figure is the lowest since February of last year.

The four-week average of claims, which evens out the week-to-week ups and downs, fell by 10,250 to 213,000.

The overall numbers receiving unemployment benefits for the week of December 28 rose to 1.87 million, an increase of 33,000 from the previous week, according to The AP.

The US job market has cooled from the red-hot stretch of 2021-2023 when the economy was rebounding from COVID-19 lockdowns.

Through November, employers added an average of 180,000 jobs a month in 2024, down from 251,000 in 2023, 377,000 in 2022 and a record 604,000 in 2021. Still, even the diminished job creation is solid and a sign of resilience in the face of high interest rates.

When the Labor Department releases hiring numbers for December on Friday, they’re expected to show that employers added 160,000 jobs last month.

On Tuesday, the government reported that US job openings rose unexpectedly in November, showing companies are still looking for workers even as the labor market has loosened. Openings rose to 8.1 million in November, the most since February and up from 7.8 million in October,

The weekly jobless claims numbers are a proxy for layoffs, and those have remained below pre-pandemic levels. The unemployment rate is at a modest 4.2%, though that is up from a half century low 3.4% reached in 2023.

To fight inflation that hit four-decade highs two and a half years ago, the Federal Reserve raised its benchmark interest rates 11 times in 2022 and 2023. Inflation came down — from 9.1% in mid-2022 to 2.7% in November, allowing the Fed to start cutting rates. But progress on inflation has stalled in recent months, and year-over-year consumer price increases are stuck above the Fed’s 2% target.

In December, the Fed cut its benchmark interest rate for the third time in 2024, but the central bank’s policymakers signaled that they’re likely to be more cautious about future rate cuts. They projected just two in 2025, down from the four they had envisioned in September.