Gold Hits $4,366.69 as Fed Hike Odds Climb to 70%

Gold prices rose 1.2% to $4,366.69 per ounce in recent trading. Silver gained 1.4% to reach $64.43 per ounce. Investors bought both metals after recent declines. However, the weekly outlook remains negative for both assets. Gold is down 1.4% for the week so far. Silver has fallen 2.6% over the same period. The recovery was driven by tactical buying rather than a shift in macro trends.

Market participants are adjusting their expectations for Federal Reserve monetary policy. Traders now estimate a 70% probability of a rate hike in the upcoming week. This shift follows stronger-than-anticipated producer price data in the US. Rising energy costs have reinforced concerns about underlying inflation. Higher interest rates reduce the appeal of non-yielding assets like gold. A stronger dollar also lowers the affordability of bullion for foreign holders. Steady climbs in Treasury yields compound this pressure.

Domestic prices diverge from global trends

Indian bullion markets showed a sharp correction against global gains. Silver prices dropped by Rs 10,000 to Rs 2,34,600 per kilogram. This decline occurred despite silver rising approximately 2% in global markets. Selling pressure in New Delhi pushed 99.9% purity gold down by Rs 2,700. The metal closed at Rs 1,55,900 per 10 grams. In Chennai, 22-carat gold priced at Rs 14,155 per gram. Eighteen-carat gold traded at Rs 11,925 per gram. Local demand weakened following a recent rally.

Geopolitical risks complicate the inflation outlook

Tensions in the Middle East are adding volatility to the macro picture. Reports indicate that Iran-aligned Houthis have gained control of Yemen’s port city of Mocha. They are advancing along the Red Sea coast toward significant islands. These developments have contributed to increased oil prices. Higher energy costs feed directly into consumer price data. Analysts at Exness note that these tensions amplify inflation concerns. The conflict complicates the outlook for precious metals by linking geopolitical risk to monetary policy.

CPI data will dictate next week's direction

The upcoming US Consumer Price Index release is the key event for markets. Investors await this data to gauge the Federal Reserve's next move. Stronger inflation readings could support multiple rate increases. This scenario would place further downward pressure on gold and silver. GN auto markets/commodities notes that analysts are closely watching these indicators. The data will clarify the monetary policy direction. A hawkish outcome would likely extend the current weekly losses for bullion.