After lackluster economic data raised anticipation of a June U.S. interest rate drop, gold prices rose to a two-month high on Friday.
Gold surged 2.1% to $2,086.21 per ounce by 1:50 p.m. EST (1850 GMT), the highest since late December, on course for a second straight weekly gain. US gold futures rose 2% to $2,095.7.
After the data, benchmark 10-year Treasury yields and the dollar index (.DXY) fell, making gold more attractive.
U.S. manufacturing fell further in February, while University of Michigan consumer surveys were negative. Thursday's report showed the weakest January U.S. inflation gain in nearly three years, keeping a June Federal Reserve rate drop on the table.
TD Securities head of commodity strategy Bart Melek said gold is rising because the market believes the Fed will soften monetary policy by midyear, decreasing bullion's opportunity cost. He added "In three-four months, prices will hit a record if we see poor economic data and the market is convinced that (the) Fed is ready to cut," adding that significant central bank buying is also helping the market.
Behind weaker-than-expected data and slightly friendlier Fed comments, buying has been continuous today. New York-based independent metals analyst Tai Wong said the NYCB news after the closing yesterday set the stage.
The announcement that New York Community Bancorp uncovered "material weaknesses" in internal controls connected to its loan evaluation increased commercial real estate exposure concerns. Spot silver climbed 2.6% to $23.26.
Platinum climbed 1.2% to $886.15 and palladium 1.4% to $955.50. Both eased weekly. Northam Platinum (NPHJ.J) opens new tab CEO said platinum mining businesses in South Africa are facing the biggest crisis in 30 years as prices fall.
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