Veriton Investment

Gold Heads for Sixth Weekly Gain on Risk-Off Tone and ETF Flows

(Bloomberg) -- Gold traded just shy of its record high — on track for a sixth weekly gain — supported by elevated geopolitical tensions, inflows into bullion-backed exchange-traded funds, and a risk-off tone in broader markets.

Bullion for immediate delivery held near $3,750 an ounce, up by about 1.9% this week after peaking on Tuesday above $3,791. European diplomats warned the Kremlin this week that NATO is ready to respond to further violations of its airspace with full force, including by shooting down Russian planes.

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Gold has soared about 43% this year, setting successive peaks on central-bank demand and a resumption of interest-rate cuts by the Federal Reserve. Prices are on track to close out a third consecutive quarterly gain next week, with holdings in bullion-backed ETFs at the highest since 2022. Banks including Goldman Sachs Group Inc. have said they expect the rally to extend.

After Fed policymakers opted to cut borrowing costs earlier this month, there have been mixed signals about the next move. Among comments on Thursday, Michelle Bowman, the Fed’s top bank cop, said inflation was close enough to target to justify more rate reductions because the job market was weakening.

Investors will focus on US data later Friday. A report is forecast to show the personal consumption expenditures price index excluding food and energy — the Fed’s preferred gauge of underlying inflation — rose 0.2% in August, from 0.3% in July. On an annual basis, the core measure may hold at 2.9%.

Elsewhere, there are signs that elevated prices are weighing on physical bullion demand. Gold-jewelry sales in India are set to drop by more than a quarter during the upcoming festival season as buyers seek less costly alternatives, according to the India Bullion and Jewellers Association.

Gold was little changed at $3,753.70 an ounce at 10:04 a.m. in London. Silver has also performed strongly, topping $45 an ounce this week for the first time since 2011.

In other precious metals, platinum rose above $1,557 an ounce in intraday trade to reach the highest since 2013, and palladium was on course for a weekly rise of more than 7%.

--With assistance from Jack Ryan.