Commodity Market: Gold heads for biggest weekly gain in three on expectations of slower Fed rate hikes

Spot Gold was set to register its best weekly performance in three weeks, as the US Dollar eased on expectations of slower rate hikes by the Federal Reserve.

The US Dollar Index was set for a weekly loss of 1.5%, as expectations that a peak in interest rates could be near weighed on its demand.

Fed Chair Jerome Powell said earlier this week it was time to slow the pace of monetary policy tightening, which triggered a correction in the US Dollar and underpinned Gold.

Rising interest rates have weighed on the yellow metal’s appeal this year, as they are associated with a higher opportunity cost of holding Gold, which does not pay any interest.

“The $1,805 level may act as an immediate resistance for gold, a break above which may trigger fresh rallies,” Hareesh V Nair, head of commodity research at Geojit Financial Services, said.

Market focus now sets on US Non-Farm Payrolls data, scheduled to be released at 13:30 GMT today.

“A softer print on wage growth and NFP would be a case of all stars aligned for further dollar weakness and that should further benefit gold. However, an upside surprise in the report may halt gold’s ascend, especially with prices trading near key resistance level,” OCBC Forex strategist Christopher Wong was quoted as saying by Reuters.

As of 9:23 GMT on Friday Spot Gold was edging down 0.11% to trade at $1,801.11 per troy ounce. Earlier in the trading session, the precious metal went up as high as $1,804.63 per troy ounce, which has been its strongest price level since August 10th ($1,807.96 per troy ounce).

Gold has advanced 2.75% so far this week, following another 0.15% gain in the previous week.

Gold futures for delivery in February were inching down 0.02% on the day to trade at $1,814.80 per troy ounce, while Silver futures for delivery in March were up 0.28% to trade at $22.905 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was edging down 0.16% to 104.570 on Friday. Earlier in the session, the DXY slipped as low as 104.377, which has been its weakest level since June 29th (104.356).