Gold set for second weekly rise

Gold prices were on track for their second straight weekly gain on Friday as demand strengthened amid expectations around interest rates from the U.S. Federal Reserve, while auto-catalyst metal palladium jumped more than 8%.

Spot gold was down 0.2% at $2,354.86 per ounce as of 09:31 a.m. ET (1331 GMT). However, bullion has gained 0.9% so far this week, adding to the 1.7% increase last week.

U.S. gold futures were flat at $2,368.70.

“Gold has benefited from a run of soft economic data this week and traders continue to consider bad news as ‘good news’ which will lead to earlier and more rate cuts,” said Tai Wong, a New York-based independent metals trader.

Data on Thursday showed first-time applications for U.S. unemployment benefits fell moderately last week, while new housing construction dropped. This, along with tepid retail sales last month, keeps the chance of a September rate cut on the table.

The market is currently pricing in one to two rate cuts of 25 bps each from the Fed this year. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

Meanwhile, spot palladium rose 5.5% to $974.25 per ounce, after hitting a one-month high earlier in the session. However, spot prices are still down 11% so far this year, after a 39% slump in 2023.

“The (palladium) market is tight this morning and has been relatively tight all week. Note the excessively high outright short positions on NYMEX; as the quarter (and is some cases fiscal year) end approaches next week there may be some book-squaring-related covering going on,” StoneX analyst Rhona O’Connell said.

Palladium prices are trading above their 21-50-and-100 day moving averages, considered a bullish sign for investors who follow technical signals.

Elsewhere, platinum was up 1.5% to $992.72 per ounce, while silver fell 1.9% to $30.13, but both metals were heading for weekly gain.