Gold heads for weekly gain as traders eye Fed cuts

Gold headed for a back-to-back weekly gain on expectations that the Federal Reserve will trim interest rates before year-end, with traders looking ahead to US payrolls data for the next batch of clues on the outlook.

Bullion for immediate delivery traded above $2,363 an ounce after rising by more than 1% this week. Silver has also benefited from the upswing, advancing back toward $31 an ounce.

Reports on Wednesday showed the American services sector contracted at the fastest pace in four years, while the labor market saw further signs of softening. If inflation continues to trend lower, the slowdown could allow the Fed to reduce borrowing costs, aiding gold as it doesn’t pay interest.

Gold’s push higher this week extends a run of three quarterly gains, with prices hitting a record in May. The rally has been driven by hefty central-bank purchases and geopolitical tensions. Buying in Asia has also helped as local currencies fell, with investors seeking assets that preserved their value.

Spot gold was 0.3% higher at $2,363.67 an ounce at 1:30 p.m. in Singapore, with the Bloomberg Dollar Spot Index and 10-year US Treasury yields both on course for weekly declines. Silver’s up almost 5% this week, while platinum and palladium have also gained ground.

The US employment report is expected to show a step-down in hiring, plus a moderation in wage growth. Payrolls probably rose by 190,000 last month, according to the median estimate in a Bloomberg survey. Unemployment was seen holding at 4%, the highest in more than two years.