Dollar Strength Pushes Gold Down to $4,351
Spot gold declined 0.8% to $4,351 per ounce as the US dollar posted its sharpest weekly gain since August. The rise in the DXY index offset recent rallies in equities and bonds, creating immediate headwinds for bullion prices.
Spot gold prices in London fell 0.8% on Friday afternoon to $4,351 per troy ounce. This decline reversed part of the sharp rally seen earlier in the week. The drop occurred as the US dollar reached its highest level since late July.
The dollar index, or DXY, jumped 1.4% from the start of the week. This marks the steepest weekly increase since August of last year. The stronger currency reduced the appeal of gold for non-US investors.
Treasury Yields Return to Two-Decade High
The yield on the 10-year US Treasury rose above 5.00% per annum. This level matches the two-decade high reached before the Federal Reserve's latest meeting. The central bank raised its overnight funds rate by 0.25 points to 3.88%.
Despite US inflation hitting 3.7% in July, political pressure for lower rates intensified. President Trump called for rapid rate cuts on social media. He argued that US interest rates should be at 1% or less.
Global equity markets also retreated from their post-Fed bounce. The S&P 500 index showed a 0.4% weekly drop. The MSCI World Index fell 0.7% over the same period.
Silver Holds Gains While Oil Flatlines
Silver prices remained resilient, holding a near-$2 gain at $66.30 per troy ounce. The metal earlier traded near $67 at London's midday auction. This was the highest Friday fix for silver so far this month.
Oil prices stayed flat beneath Tuesday's four-month closing high. Saudi Arabia informed European refineries that no shipments would arrive next month. Supply constraints persist due to attacks on the east-west pipeline by Iran-backed groups.
Asia Premium Narrows Amid Strong Demand
Gold in Shanghai rose to a one-week high of ¥947 per gram. This price cut the premium relative to London from $20 to $13 per ounce. The weekly average premium stood at almost $16, the highest since mid-May.
China remains the top global consumer and buyer of gold. Private households increasingly choose investment bullion over jewelry. In contrast, Indian gold traded at a $60 discount to global prices. This discount is smaller than last week's $75 gap.
