Gold held above $1,920 an ounce on Friday, hovering near its strongest levels in nine months on firm expectations that the US Federal Reserve will slow the pace of its interest rate hikes. The metal is also on track to gain for the fifth straight week. Meanwhile, a chorus of Fed officials reiterated their commitment to tighter policy this week, though weakening US data that fueled recession fears tempered rate hike concerns.
Markets are currently expecting the US central bank to downshift to a smaller 25 basis point rate hike in February after delivering a half-percentage point increase in December. Elsewhere, consumer prices in the UK also fell for the second straight month in December, adding to further signs that inflationary pressures may have finally peaked in Western economies. Gold is highly sensitive to the rates outlook as higher interest rates raise the opportunity cost of holding non-yielding bullion, and vice versa.