Gold Rebounds 1.1 Percent to 4363 Dollars per Ounce

Spot gold climbed 1.1 percent to 4363.01 dollars per ounce on Friday. This move reversed the nearly 2 percent drop seen on Thursday. The metal remains down 1.5 percent for the week. US gold futures settled at 4408.90 dollars per ounce with little change.

The rebound occurred despite the release of strong US inflation data. The Consumer Price Index rose 0.4 percent in August. This followed a 0.1 percent increase in July. Higher inflation figures bolstered expectations for a Federal Reserve interest rate hike next week.

Inflation data shifts rate expectations

Traders now price in an 87 percent chance of a rate hike. This probability was 67 percent before the inflation data release. The CME FedWatch Tool tracks these market estimates. Higher interest rates reduce the appeal of non-yielding assets like gold.

Oil prices fell but remained on track for a weekly gain. Higher oil prices stoke inflation fears. These fears strengthen bets on tighter monetary policy. Gold typically serves as an inflation hedge, but rising rates offset this benefit.

Precious metals show mixed weekly performance

Spot silver rose 1.6 percent to 64.54 dollars per ounce. It remains down 2.6 percent for the week. Platinum gained 1 percent to 1792.11 dollars per ounce. Palladium increased 2.1 percent to 1308.63 dollars per ounce. All three metals are set for weekly losses.

Regional demand dynamics remain diverse

Gold demand in India was subdued this week. Volatile prices discouraged buyers in the region. Investment demand remained strong in China, a top consumer. Independent metals trader Tai Wong noted that gold is finding a short-term base.