Gold prices steadied on Friday after a choppy trading session, helped by dovish commentary from a senior Federal Reserve official that reignited expectations for a potential rate cut in December. The metal had been under pressure earlier in the week as investors weighed stronger-than-expected economic figures and lingering inflation concerns, both of which tend to push yields and the dollar higher — a challenging environment for non-yielding assets like gold.

However, the tone shifted when the Fed signalled that borrowing costs may begin easing sooner than previously anticipated. Lower interest rates typically reduce the opportunity cost of holding gold, giving the metal a firmer footing. Traders reacted quickly, trimming bearish positions and providing a stabilising lift that helped gold claw back earlier losses.

Despite this recovery, market sentiment remains cautious. Inflation has cooled but remains above target, and the US dollar continues to show resilience, factors that can restrain gold’s upside in the near term. Geopolitical tensions and fluctuating risk appetite also continue to play their part, driving bouts of safe-haven demand followed by sharp profit-taking.

Investors will now look toward upcoming economic releases and Fed commentary for confirmation that a softer policy path is in play. If the central bank continues to emphasise flexibility and acknowledges the need for rate cuts, gold could benefit from a sustained tailwind. Conversely, if economic data surprises to the upside, reinforcing the case for higher rates for longer, the metal may face renewed selling pressure. For now, gold appears to have found a moment of stability in an otherwise uncertain landscape.