Investing.com - The conviction the Fed won't be raising rates anytime soon is pushing the dollar down and jacking spot gold back around the key $1,300 level.
The seven-month highs in bullion's price on Friday was accompanied by a rally in palladium, although the auto-catalyst metal fell short of making new all-time highs above $1,400 per ounce.
The spot price of gold traded at $1,297.94 per ounce by 1:00 PM ET (18:00 GMT), after reaching $1,300.33 earlier, its highest since June.
On the New York Mercantile Exchange's Comex division, the most-active gold futures contract gained $17.25, or 1.4%, to $1,297.05 per ounce. The session peak was $1,299.65. Since hitting its own highs of above $1,300 on Jan. 4, Comex gold has traded in a band of $10 to $15 under that peak.
The dollar index, a contrarian trade to precious metals, slid on expectations that next week's Federal Reserve meeting will not yield another rate hike like in December. Fed funds futures are pricing in a 98% chance that the FOMC keeps rates steady, according to Investing.com's Fed Rate Monitor Tool.
The Fed raised rates four times last year but Fed Chairman Jerome Powell has since indicated a willingness to be "patient" with tightening based on economic performance. Other Fed governors have also been dovish.
Further weighing on the dollar was the euro, which rose after the European Central Bank said it will delay, but not do away with, the bloc's eventual rate hike. The yuan also rose on hopes of an imminent resolution to the U.S.-Sino trade dispute.
"The fact that gold has so far refused to go down meaningfully from around the $1295-$1300 resistance area suggests that the selling pressure has not been strong as some would have expected from around this key hurdle, " said Fawad Razaqzada, analyst at forex.com.
"So, as things stand, gold looks poised for another potential breakout above $1300, which could then lead to further technical follow-up buying pressure in early next week."
The spot price of palladium traded at $1,360.50 per ounce, up $37.60, or 2.8%. The session peak was $1,362.95.
Spot palladium hit all-time highs of $1,440.35 on Jan. 17, making it the world's most valuable traded metal currently, although gold had reached record highs above $1,900 previously.
The most-active palladium futures contract on Comex jumped $38.80, or 3%, to $1,319.50 per ounce.
In other metals trading on Comex, silver futures gained 37 cents, or 2.4%, to $15.67 per ounce.
Platinum futures rose by $13.50, or 1.7%, to $818.50 per ounce.
In base metals,copper climbed 8 cents, or 3%, to $2.72 per pound.