Gold and silver prices retreated on Friday from record highs, but were positioned for weekly gains on growing anticipation of another bumper U.S. interest rate cut this year.
Spot gold slipped 0.5% to $2,656.19 per ounce, holding below previous session’s record peak of $2,685.42. U.S. gold futures dipped 0.6% to $2,679.1.
Spot silver was 0.4% lower to $31.90 per ounce, after hitting a near 12-year peak of $32.71 in the previous session.
Silver prices surged due to bullion’s strong performance and China’s stimulus measures, though some analysts warn that the rally may fade due to concerns over industrial demand.
The Federal Reserve’s larger-than-usual half-percentage-point reduction last week ignited a rally in gold, which hit consecutive record highs and has gained about 1.8% so far this week.
Gold prices are currently supported by anticipated U.S. Fed interest rate cuts and China’s stimulus measures, both of them are weakening the dollar, said Kyle Rodda, financial market analyst at Capital.com.
The dollar was down for a fourth straight week, making greenback-priced commodities less expensive for other currency holders.
Currently, traders anticipate a 51% chance of another half-percentage-point reduction in November, according to CME FedWatch Tool.
Lower interest rates reduce the opportunity cost of holding bullion, which is also viewed as a safe asset during economic and political turmoil.
Market focus is now on the core personal consumption expenditures price index data, the Fed’s preferred inflation gauge, due later in the day.
“We note that the U.S. Fed rate cut comes against a myriad of geopolitical tensions, with conflict in the Middle East and the upcoming presidential elections in the U.S. at the forefront,” BMI said in a note, adding they see higher highs for gold in the coming months.
