Gold - The long-awaited breakthrough may be fake

Gold prices rose to their highest in two weeks Friday, while silver hit its highest in a month in what appeared to be a largely technical move, albeit one done in the relatively confident expectation of an interest rate cut from the Federal Reserve next week.

The move was all the more conspicuous for happening in the absence of any major move in global bond prices. European bond yields edged higher as the German Ifo business climate index stabilized, while U.S. Treasury yields were broadly flat.

Markets estimate that the Fed is likely to cut interest rates by another 0.25% at its meeting next Wednesday to 95%, assuming the value has already been decided. In addition, the likelihood of further reductions in rates in December increased from 20% to 25%.

The monetary easing trend across the world has been in evidence repeatedly this week, with the central bank of Russia following its peers in Indonesia and Turkey in cutting its key rate on Friday. The CBR cut by a larger-than-expected 50 basis points to 6.50%, citing a sharp drop in its inflation expectations. Turkey's central bank had cut by an even more aggressive 250 basis points on Thursday, further unwinding the emergency measures it took to defend the lira earlier this year (when the pressure on the currency from U.S. interest rates was much more acute).

And while the European Central Bank didn't add to the multi-faceted stimulus package it unveiled in September at its council meeting Thursday, ECB President Mario Draghi repeated that the risks to the eurozone economy were still heavily tilted to the downside.

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