Gold prices rose more than 1% on Friday as weaker-than-expected U.S. inflation data rekindled hopes that the Federal Reserve would cut interest rates this year, offsetting concerns from a stronger-than-expected jobs report released earlier in the week.
Spot gold was up 1.5% at $4,992.27 an ounce as of 9:12 a.m. ET (14:12 GMT), up 0.6% so far this week. Bullion prices fell about 3% on Thursday, hitting their lowest in almost a week.
U.S. gold futures for April delivery rose 1.3% to $5,013.60 an ounce.
“Gold, and especially silver, are enjoying a relieved rally following the benign January CPI release, as nerves heightened by Wednesday’s positive employment report have eased,” said Tai Wong, an independent metals trader.
CPI is lower than expected
Spot silver rose 2.7% to $78.72 an ounce, rebounding sharply from an 11% drop in the previous session. It rose 1.2% for the week.
The U.S. consumer price index rose 0.2% in January, the Labor Department said, following an earlier 0.3% rise in December and below the 0.3% rise expected by economists.
Market participants currently expect a total of 63 basis points of rate cuts this year, with the first rate cut expected in July, according to data compiled by LSEG.
Non-yielding bullion tends to do well in low interest rate environments.
Meanwhile, Wednesday’s data showed the U.S. added 130,000 jobs in January, compared with analysts’ expectations of 70,000.
Gold demand in China remained strong ahead of the Lunar New Year, but in India the market turned into a discount.
Analysts at ANZ raised their forecast for gold in the second quarter to $5,800 from $5,400/oz, citing its appeal as an insurance asset, while noting that while silver remains supported by strong investment demand, recent outperformance could fade as industrial buyers balk at high prices.
Spot platinum rose 2.7% to $2,053.01 an ounce and palladium rose 2% to $1,649.50. Both metals were scheduled to record weekly losses.
(Reporting by Anmol Choubey and Anjana Anil in Bengaluru; Editing by David Holmes)
