Gold rebounded from earlier losses on Friday (October 10th) and is on track for its eighth consecutive weekly gain, driven by widespread political and economic uncertainty and expectations of further US interest rate cuts, while silver is nearing a record high.

Spot gold, which hit a record high of $4,059.05 on Wednesday, rose 0.6% to $3,998.02 an ounce by 11:12 GMT – a gain of 2.9% so far this week. US gold futures for December delivery rose 1% to $4,012.30. Non-yielding bullion is traditionally considered a hedge during times of broader uncertainty.

"Gold is no longer just a defensive asset—it's become an offensive asset. In this environment, gold is the strongest alternative to the dollar and a true measure of confidence in the global financial system," said Alex Ebkarian, COO at Allegiance Gold, adding that gold is in a secular bull market for the next five years.

Multiple factors are supporting this rally, including geopolitical risks, strong central bank buying, exchange-traded fund (ETF) inflows, expectations of a US interest rate cut, and trade-related uncertainty.

Silver rose 2.6% to $50.40 an ounce a day after hitting a record high of $51.22. Its price has risen 74% so far this year. "Given rising rental rates, a pronounced backwardation curve, and a lack of liquidity in the London over-the-counter market, greater volatility in silver is expected," said Hugo Pascal, a precious metals trader at InProved.

Backwardation occurs when the spot price of a commodity is higher than its futures price. "If contango (the opposite of backwardation) returns and pressure eases, a brief pullback could occur (in silver) — and that could prove to be the next big buying opportunity," Ebkarian said.

The US dollar index fell 0.2%, making dollar-priced gold bullion cheaper for overseas buyers.

Meanwhile, minutes of the US Federal Reserve's September meeting revealed that policymakers were open to interest rate cuts to address labor market risks, although inflation concerns persist. Investors still anticipate two Fed rate cuts of 25 basis points each in October and December.

The Israeli government ratified a ceasefire with the Palestinian militant group Hamas on Friday. In other metals, platinum rose 0.7% to $1,629.49 and palladium rose 3% to $1,454.59. Both metals are headed for weekly gains. (alg)

Source: Reuters