The price of gold rose by another 0.6% on Friday after it increased by 0.5% yesterday and rebounded from its lowest level since September 20. The price increase was due to the latest US labor market data - which strengthened the case for further Fed interest rate cuts - the negative dynamics of the US currency, lower yields on US Treasury bonds, as well as increased demand for safe haven assets amid the conflict in the Middle East.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) decreased by 0.15% to 102.83, making bullion more attractive for other currency holders.
The key event of today's session will be the publication of the US producer price index for September (at 12:30 GMT). Economists predict that the PPI increased by 0.1% compared to August and by 1.6% per annum after an increase of 0.2% and 1.7%, respectively, in August. Meanwhile, the core PPI is projected to grow by 0.2% m/m and 2.7% per annum. In August, the core PPI increased by 0.3% m/m and 2.4% per annum. If the PPI data comes in softer, gold's momentum could continue upward.
According to the CME FedWatch Tool, markets see a 84.3% probability of a 0.25% rate cut at the November meeting (compared to 94.4% a week earlier) and a 82.8% probability of a 0.25% rate cut in December (compared to 80.2% a week earlier). Lower interest rates reduce the opportunity cost of holding bullion.