2023.12.0118:10:00UTC+00Gold Futures Settle Notably Higher As Dollar Turns Weak

Gold prices moved up sharply on Friday as the dollar fell and bond yields dropped amid rising bets the Federal Reserve is likely to end its tightening cycle.

However, during his speech at Spelmen College today, Fed Chair Jerome Powell acknowledged recent signs of slowing price growth but said the Fed is committed to keeping monetary policy restrictive until officials are confident inflation is on a path to 2%.

"It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease," Powell said.

Powell stressed the Fed is prepared to tighten policy further if it becomes appropriate, although most economists believe the central bank is done raising rates.

The dollar index dropped to 103.16, losing about 0.3%.

Gold futures for February ended higher by $32.50 at $2,089.70 an ounce.

Silver futures for March ended up $0.197 at $25.857 an ounce, while Copper futures for March settled at $3.9315 per pound, gaining $0.0810.

U.S. consumer spending moderated in October, the Fed's preferred inflation measure eased in the month and weekly jobless claims rose slightly, signaling that interest rate cuts are on the horizon.

In economic releases today, a report from the Institute for Supply Management said its manufaturing PMI came in at 46.7 in November, unchanged from October. Economists had expected the index to inch up to 47.6.

"The yellow metal has been buoyed recently by a less hawkish Fed and weaker labor market and inflation data," says Craig Erlam, Senior Market Analyst at OANDA UK& EMEA.

"There's plenty more to come from the US data and central bank over the next couple of weeks but today's figures won't have done it any harm either. Record highs are not far away now either so it could be a bright end to the year for gold," he adds.