Gold prices rose 1% and were on track for a weekly gain as growing expectations of a U.S. Federal Reserve rate cut next week pressured the dollar, while silver reached a record high.

Spot gold was up 1.1% to $4,255.59 per ounce at 10:44 a.m. ET (1544 GMT), and was on track for a 0.5% weekly gain.

U.S. gold futures for February delivery were up 1% to $4,286.90 per ounce.

“The market is increasingly confident that the central bank is going to cut (rates) and in response to that, we’ve seen the U.S. dollar weaken a little bit and that’s accretive for gold,” said Bart Melek, global head of commodity strategy at TD Securities.

The U.S. dollar index fell 0.1%, making gold more attractive for buyers using other currencies. Lower interest rates tend to benefit gold, which does not offer a yield. [USD/]

U.S. economic data showed the core Personal Consumption Expenditures (PCE) Price Index rose 0.3% in September, with the annual increase slowing to 2.8% from 2.9% in August. 

This followed private payroll data revealing the sharpest decline in over two-and-a-half years last month.

Dovish commentary from several Fed officials has further fueled expectations of monetary easing. 

CME’s FedWatch tool indicates an 87.2% probability of a 25-basis-point rate cut at the Fed’s December 9-10 meeting.

Gold is projected to trade between $4,200 and $4,500 this year, and between $4,500 and $5,000 next year, depending on the Fed’s decisions, said Alex Ebkarian, COO at Allegiance Gold.

Source: Marketscreener