Gold prices hover near record peak with weekly gains in sight

Gold prices hovered near an all-time high on Friday, and poised for a weekly gain due to a weaker dollar, while investors focused on U.S. economic data that could offer additional insights into the Federal Reserve‘s policy decision.

FUNDAMENTALS

* Spot gold was flat at $2,558.19 per ounce, as of 0051 GMT, and has climbed 2.5% for the week so far.

* Bullion rose more than 1% in the previous session and hit a record high, after U.S. data signalled an economic slowdown.

* U.S. gold futures edged 0.2% higher to $2,586.60. * The dollar weakened 0.3%, making gold less expensive for other currency holders.
* Data on Thursday showed that the U.S. producer prices increased slightly more than expected in August, but the trend remained consistent with subsiding inflation.
* Additionally, on the labour market side, data showed the number of Americans filing new applications for unemployment benefits increased marginally last week.
* The International Monetary Fund said on Thursday it was appropriate for the U.S. Federal Reserve to begin a long-awaited monetary easing cycle at its meeting next week as upside risks to inflation have subsided.

* Markets are currently pricing in an 57% chance of a 25-basis-point U.S. rate cut at the Fed’s Sept. 17-18 meeting, and a 43% chance of a 50-bps cut, the CME FedWatch tool showed. It would be the first rate cut since March 2020.

* Lower rates reduce the opportunity cost of holding a zero-yield bullion.

* Traders will brace themselves for the consumer sentiment (prelim) data for any further clues.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.53% to 870.78 tons on Thursday.

* Spot silver was up 0.1% at $29.94 per ounce, platinum gained 0.8% to $985.20 and palladium climbed 0.8% to $1,055.64.