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Investing.com - Gold prices inched higher on Friday, rebounding from earlier losses, as the yellow metal remained on track to rise for an eight straight week thanks to enduring safe-haven demand and expectations for upcoming U.S. interest rate cuts.
Spot gold rose 0.3% to $3,987.65 an ounce, while gold futures for December added 0.7% to $4,003.30/oz by 07:59 ET (11:59 GMT).
Spot prices crossed $4,000/oz for the first time ever this week, hitting fresh all-time peaks along the way. Over the past one-year period, it hasclimbed by more than 51%.
Analysts have highlighted a range of factors underpinning the increase, including heavy central bank demand for bullion in the wake of the freezing of Russian assets after the outbreak of fighting in Ukraine in 2022, relatively modest growth in the amount of new gold being mined, and a spike in retail investment activity that has sparked inflows into gold-linked exchange traded funds.
However, gold clocked steep overnight losses that brought it below the $4,000 level after the signing of a U.S.-brokered ceasefire agreement between Israel and Hamas. The deal is the first phase of a 20-point peace plan proposed by U.S. President Donald Trump. At the same time, delayed economic data during an ongoing U.S. government clouded the outlook for Federal Reserve monetary policy.
ANZ analysts said the recent losses in gold and other precious metals were fueled largely by profit-taking, after a “meteoric rise” in recent weeks. But they predicted that any weakness may be “short-lived and shallower,” adding that several catalysts still remained to push gold higher.
“We see structural drivers for gold still in place to support higher prices. The Federal Reserve is expected to remain on its easing path amid increasing downside risks to employment,” ANZ analysts wrote in a note. They also said the prolonged federal government in the U.S. would keep investors broadly risk-averse, bolstering gold.
The yellow metal later recovered much of its earlier declines, with investors indeed continuing to fret over broader economic and political uncertainty in countries around the world.
Meanwhile, bets that the Fed will opt to once again reduce rates by a quarter of a percentage point at its October 28-29 gathering remained intact, even with the lack of fresh official data, CME’s FedWatch Tool showed. Should lawmakers in Washington fail to resolve a now more than week-old standoff, more numbers could be postponed, namely crucial U.S. inflation data next week. Media reports have said the Bureau of Labor Statistics, the agency responsible for putting together the inflation figures, is planning to bring back furloughed workers to get the report out, although the exact date when it would be published was unclear.
(Ambar Warrick contributed reporting.)