On Friday, spot gold extended its gains from the previous session as the latest macroeconomic data reinforced market expectations for a Fed rate cut in November.

Previously released official data showed that U.S. annualized headline inflation fell for the sixth consecutive month in September to 2.4%, the lowest level since February 2021.

Meanwhile, initial U.S. jobless claims rose to 258,000 in the week ended Oct. 5, a 14-month high and higher than the 230,000 expected by the market.

Investors are now focusing on the US Producer Price Index (PPI) report for September, which is expected to be released at 12:30 GMT.

Kelvin Wong, senior market analyst at OANDA Asia Pacific, said: “Gold's short-term gains have been largely driven by the positive performance of recent data. If the PPI data is weaker than expected, gold's upward momentum may continue.”

Wong further said, “From a technical perspective, gold may test $2,657 again in the short term, and if it breaks through this level, it may challenge its all-time high.”

The market currently expects the probability of a 25 basis point rate cut at the November Fed policy meeting to be around 84%, up from 76% prior to the previous data release.

Lower interest rates reduce the opportunity cost of holding interest-free assets such as gold, which boosts the attractiveness of gold. Spot gold was up 0.47% at $2,642.18 an ounce as of 7:16 a.m. Friday.Gold futures for December delivery rose 1.22% to $2,658.15 an ounce.

Meanwhile, the U.S. dollar index, which measures the greenback's relative strength against six other major currencies, edged up 0.05 percent to 102.934.