NEW YORK: Gold prices scaled an over eight-month peak on Friday, holding above the key pivot of $1,900 per ounce, as cooling US inflation raised hopes for slower interest rate hikes from the Federal Reserve.

Spot gold rose 1.3% to $1,920.70 per ounce by 2:11 p.m. ET (1911 GMT), the highest since end-April 2022. The metal has risen 2.9% so far this week.

US gold futures > settled up 1.2% at $1,921.7.

“That gold prices are rallying after an on-consensus CPI for which the market was well positioned for highlights that there’s another source of buying activity in gold markets,” said Daniel Ghali, commodity strategist at TD Securities, attributing it to central banks and non-central bank government agencies.

Data on Thursday showed that U.S consumer prices fell for the first time in more than 2-1/2 years in December.

Following the data, Fed policymakers expressed relief that inflation continued to ease in December, paving the way for a possible step down to a 25-bps rate hike increase at its next policy meeting in February.

Lower interest rates tend to be beneficial for bullion, decreasing the opportunity cost of holding the non-yielding asset.

Additionally, buying in top-consumer China normally picks up ahead of the Lunar New Year holidays, which run from Jan. 21.

The US dollar was heading for its worst week in over a month, making gold less expensive for other currency holders.

“We believe that the (gold) market will initially take a breather until it becomes clearer whose prediction of the future course of US monetary policy is more accurate – the market’s or the Fed’s,” Commerzbank analysts said in a note. Spot silver jumped 2.1% to $24.28 per ounce, en route its highest weekly rise since the week of Dec. 23.

Platinum edged 0.2% lower to $1,065.62 and palladium was down 0.2% at $1,788.85, falling earlier to $1,727, with both metals headed for a weekly drop.