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Gold futures extended a gain above a key $1,500 price on Friday and looked poised to carve out a fresh near-term settlement high as investors positioned for more easing from global central banks, which could add further support for bullion.
December gold GCZ19, +0.78% on Comex gained $9.20, or 0.6%, to $1,514.20 an ounce, which would mark the highest close for the most-active contract since Oct. 4, if it holds, according to FactSet data, following a 0.6% gain for the metal on Thursday.
For the week, the yellow metal was on track to rise 1.3%, representing its steepest such advance since the period ended Aug. 9, according to FactSet data.
Silver for December delivery SIZ19, +2.81%, meanwhile, jumped 48 cents, or 2.7%, to trade at $18.29 an ounce, following a 1.3% rise for the commodity a day ago. The white metal was on pace for a weekly gain of 3.7%, which would represent its sharpest such rise since the period ended Aug. 30.
Investors await the Federal Reserve’s policy decision at a two-day gathering on Oct. 29-30, with traders expecting the U.S. central bank to deliver its third quarter percentage point interest cut of the year. However, it isn’t clear if the Fed will conform to high market hopes and ease policy further.
Another factor that has added some support for bullion and precious metals has been Brexit. U.K. Prime Minister Boris Johnson said he would seek a general election in Dec. 12 to break a Brexit deadlock, but it is uncertain if he can win Parliament’s support for the vote, which could raise the chances of a disorderly exit from Europe’s trade bloc.
Investors say those uncertainties in the market as well as other demand factors may help bullion mount a breakthrough after a lackluster stretch.
“The recent rebound was also important from a technical point of view, as this recovery is breaking up the negative trendline of the past few weeks. The key level of $1,500 is now a support, while the first resistance level is placed at $1,520,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades, in a Friday note.
Seasonal factors also have been cited as a boost for gold, with commodity experts saying that the India holiday of Diwali, where gold buying tends to increase, could deliver a fillip to futures.
“Gold recovered to $1,500 just in time for the long weekend of Diwali celebrations,” he wrote.
