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Gold Set for Second Straight Weekly Rise

Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
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Gold Set for Second Straight Weekly Rise

Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo

Gold prices firmed on Friday and were set for a second straight weekly gain, while traders awaited US employment data to gauge the trajectory of the Federal Reserve's potential interest rate cuts.
Spot gold rose 0.3% at $2,363.19 per ounce, as of 0506 GMT and was up more than 1% for the week. US gold futures gained 0.1% to $2,372.60, Reuters said.
The US dollar was on track for a weekly decline, making dollar priced-bullion more attractive to buyers holding other currencies.
"Gold has enjoyed a productive week so far, with the precious metal being a beneficiary of some weaker US macro data," said Tim Waterer, KCM Trade's chief market analyst.
Economic data on Wednesday, including weak services and ADP employment reports, pointed to a slowing US economy. A separate report showed an increase in initial applications for US unemployment benefits last week.
Market spotlight is on the US nonfarm payrolls report due at 1230 GMT.
"If the jobs data misses the mark on the lower side, I expect investors will start to further fancy a possible September rate cut from the Fed, which could see gold have another crack at the $2,400 level," Waterer said.
Traders are currently pricing in about a 73% chance of a Fed rate cut in September, according to CME FedWatch Tool.
Lower interest rates reduce the opportunity cost of holding non-yielding gold.
Analysts at NAB expect gold prices to average around $2,200 per ounce in 2024 before easing to $2,050 in 2025.
"Gold demand in early 2024 has been underpinned by central bank purchases – with a key priority of these institutions appearing to be the diversification of assets within their reserves," NAB said in a note.
Spot silver rose 0.5% to $30.56 and was headed for its best week since May 17.
Platinum fell 0.3% to $999.64. Palladium gained 0.5% to $1,022.25 and was headed for a third consecutive weekly gain.

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Bank of England Cuts Main Interest Rate by a Quarter-point to 4.75%

Bank of England Deputy Governor for Monetary Policy Clare Lombardelli, Bank of England Governor Andrew Bailey, The Bank of England's Head of Media and Stakeholder Engagement Katie Martin and Deputy Governor, Markets and Banking, Dave Ramsden hold the central bank's Monetary Policy Report press conference at the Bank of England, in London, on November 7, 2024. HENRY NICHOLLS/Pool via REUTERS
Bank of England Deputy Governor for Monetary Policy Clare Lombardelli, Bank of England Governor Andrew Bailey, The Bank of England's Head of Media and Stakeholder Engagement Katie Martin and Deputy Governor, Markets and Banking, Dave Ramsden hold the central bank's Monetary Policy Report press conference at the Bank of England, in London, on November 7, 2024. HENRY NICHOLLS/Pool via REUTERS
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Bank of England Cuts Main Interest Rate by a Quarter-point to 4.75%

Bank of England Deputy Governor for Monetary Policy Clare Lombardelli, Bank of England Governor Andrew Bailey, The Bank of England's Head of Media and Stakeholder Engagement Katie Martin and Deputy Governor, Markets and Banking, Dave Ramsden hold the central bank's Monetary Policy Report press conference at the Bank of England, in London, on November 7, 2024. HENRY NICHOLLS/Pool via REUTERS
Bank of England Deputy Governor for Monetary Policy Clare Lombardelli, Bank of England Governor Andrew Bailey, The Bank of England's Head of Media and Stakeholder Engagement Katie Martin and Deputy Governor, Markets and Banking, Dave Ramsden hold the central bank's Monetary Policy Report press conference at the Bank of England, in London, on November 7, 2024. HENRY NICHOLLS/Pool via REUTERS

The Bank of England cut its main interest rate by a quarter of a percentage point on Thursday after inflation across the UK fell below its target rate of 2%.
The bank said its rate-setting panel lowered the benchmark rate to 4.75% — its second cut in three months — though its governor Andrew Bailey cautioned that interest rates would not be falling too fast over coming months.
“We need to make sure inflation stays close to target, so we can’t cut interest rates too quickly or by too much,” he said. “But if the economy evolves as we expect it’s likely that interest rates will continue to fall gradually from here.”
In the year to September, UK inflation stood at 1.7%, its lowest level since April 2021 and below the central bank’s target rate of 2%, The Associated Press reported.
Central banks worldwide dramatically increased borrowing costs from near zero during the coronavirus pandemic when prices started to shoot up, first as a result of supply chain issues built up and then because of Russia’s full-scale invasion of Ukraine which pushed up energy costs.
As inflation rates have recently fallen from multi-decade highs, the central banks have started cutting interest rates.
Economists have warned that worries about the future path of prices following last week's tax-raising budget from the new Labour government and the economic impact of US President-elect Donald Trump may limit the number of cuts next year.
The decision comes a week after Treasury chief Rachel Reeves announced around 70 billion pounds ($90 billion) of extra spending, funded through increased business taxes and borrowing. Economists think that the splurge, coupled with the prospect of businesses cushioning the tax hikes by raising prices, could lead to higher inflation next year.
The rate decision also comes a day after Trump was declared the winner of the US presidential election. He has indicated that he will cut taxes and introduce tariffs on certain imported goods when he returns to the White House in January. Both policies have the potential to be inflationary both in the US and globally, thereby prompting Bank of England policymakers to keep interest rates higher than initially planned.