Gold gains on Fed rate cut optimism; silver hits record high

Spot gold was up 1% to $4,212.16 per ounce at 1:36 p.m. ET (1836 GMT), but was on track for a 0.4% weekly loss.

U.S. gold futures for February delivery settled unchanged at $4,243 per ounce.

“The market is increasingly confident that the central bank is going to cut (rates) and in response to that, we’ve seen the U.S. dollar weaken a little bit and that’s accretive for gold,” said Bart Melek, global head of commodity strategy at TD Securities.

U.S. economic data showed the core Personal Consumption Expenditures (PCE) Price Index rose 0.3% in September, with the annual increase slowing to 2.8% from 2.9% in August.

This followed private payroll data revealing the sharpest decline in over two-and-a-half years last month. Dovish commentary from several Fed officials has further fueled expectations of monetary easing. CME’s FedWatch tool indicates an 87.2% probability of a 25-basis-point rate cut at the Fed’s December 9-10 meeting.

Gold is projected to trade between $4,200 and $4,500 this year, and between $4,500 and $5,000 next year, depending on the Fed’s decisions, said Alex Ebkarian, COO at Allegiance Gold.

Meanwhile, physical gold demand in India and China eased this week as buyers wait for a correction in spot prices.

Silver rose 2.6% to $58.59 an ounce, up 4% for the week, after touching a record $59.32 earlier.

“(Silver is) following the pathway of gold and many investors still believe that silver is quite cheap in relative terms,” Melek said, citing structural deficits and rising demand for electrification as supportive factors.

The white metal has rallied 98% so far this year, fueled by supply deficits and its designation on the U.S. critical minerals list.

Platinum was steady at $1,646.10, while palladium gained 0.3% to $1,453.39.