Gold Rebounds to 4,363 USD Amid Fed Hike Expectations

Spot gold rose 1.1 percent to 4,363.01 USD per ounce on Friday. The metal rebounded from recent losses to establish a short-term floor. This move occurred despite strong US inflation data that increased expectations for a Federal Reserve rate hike next week.

US gold futures settled nearly unchanged at 4,408.90 USD an ounce. The broader weekly trend remains negative, with spot gold down approximately 1.5 percent for the week. Market participants noted that volatility has muted as the probability of a rate hike was already significantly priced in.

Inflation Data Drives Rate Hike Bets

The US Consumer Price Index rose 0.4 percent last month. This followed a 0.1 percent increase in July, according to the Bureau of Labor Statistics. The data reinforced views that the Federal Reserve will tighten monetary policy at its upcoming meeting.

Traders now price an 87 percent chance of a rate hike next week. This probability increased from 67 percent before the inflation release, per the CME FedWatch Tool. Higher interest rates reduce the appeal of non-yielding bullion, which typically serves as an inflation hedge.

Precious Metals Show Mixed Weekly Performance

Spot silver gained 1.6 percent to 64.54 USD per ounce on the day. However, silver remains down 2.6 percent for the week. Platinum rose 1 percent to 1,792.11 USD, while palladium increased 2.1 percent to 1,308.63 USD. Both metals are set for weekly losses.

Gold demand in India remained subdued this week due to price volatility. Investment demand in China, however, stayed strong. GN auto markets/commodities: gold prices reports indicate that buyers are cautious amid shifting macroeconomic signals.

Oil Prices Influence Inflation Outlook

Oil prices fell on Friday but remained on track for a weekly gain. Higher oil costs stoke inflation fears, which strengthen bets on interest rate increases. This dynamic creates a complex environment for gold, where inflation support is offset by rising real yields.