Gold firmer, traders brace for cues from Fed’s Powell

Dec 1 (Reuters) – Gold firmed on Friday en route to a third consecutive weekly gain on bets that U.S. interest rates could soon be cut, but investors awaited further confirmation from Federal Reserve chair Jerome Powell.

Spot gold was up 0.6% at $2,047.19 per ounce by 10:11 a.m ET (1511 GMT), up 2.1% for the week. Prices rose 2.7% in November.

U.S. gold futures rose 0.5% to $2,067.00.

“Gold has had a Santa Claus rally and I expect that to continue until the end of this year. As we see inflation attenuate, it speeds up (the) timeline for policymakers to lower rates, which is good for gold,” said Everett Millman, chief market analyst at Gainesville Coins.

“Gold will pull back if there is a hawkish push back. But, it is certainly within the realm of possibility that gold re-tests record highs.”

Lower interest rates reduce the opportunity cost of holding zero-yield gold.

Chicago Fed President Austan Goolsbee said he believes U.S. inflation is “on track” to reaching the Fed’s 2% target.

Data on Thursday showed U.S. consumer spending rose moderately in October, while the annual increase in inflation was the smallest in more than 2-1/2 years.

Traders were currently pricing in a 50% chance of a Fed rate cut in March, CME’s FedWatch Tool showed.

But, “prices may have entered overbought territory and gold has been known to price in monetary policy expectations prematurely over the past two years,” Standard Chartered analyst Suki Cooper said in a note.

Powell will take part in a discussion later in the day, traders will watch out for his opinion on the recent shift in rate expectations.

U.S. 10-year Treasury yields slipped and the dollar (.DXY) marked its weakest month in a year in November.

Silver rose 0.2% to $25.3, headed for a third straight weekly gain.

Platinum was steady at $926.96 per ounce and palladium lost 0.2% to $1,005.84 .

Our Standards: The Thomson Reuters Trust Principles.