Gold Slides 2% Weekly as US Inflation Data Approaches

Spot gold edged up 0.2% to US$4,324.79 per ounce on Friday. The metal remains down more than 2% for the week. This marks the third consecutive weekly loss for the asset. December delivery futures stand at US$4,364.70, representing a 1% decline. Traders await the US consumer price index release scheduled for 1230 GMT. Recent producer price data showed a 0.4% rise in August. This figure followed an upwardly revised 0.1% gain in July.

Fed Rate Hike Expectations Rise

Stronger inflation signals have increased bets on a US Federal Reserve rate hike. The central bank meets next week to set policy. Higher interest rates typically pressure gold, which offers no yield. Treasury yields and the US dollar often rise in this environment. Such conditions reduce the appeal of non-yielding assets like gold. Wael Makarem of Exness notes that stronger data reinforces the case for multiple rate increases. This dynamic places additional downward pressure on metal prices.

Geopolitical Tensions Impact Market Sentiment

Iran-aligned Houthis seized control of Yemen’s port city of Mocha. Forces advanced down the Red Sea coast to strategic islands. These developments occurred after US President Donald Trump commented on the Iran conflict. Oil prices rose in response, with benchmarks tracking above US$100 per barrel. This is the first time since mid-May that prices have reached this level. Higher energy costs contribute to broader inflation expectations. These factors continue to weigh on gold prices despite its traditional role as an inflation hedge.

Precious Metals Face Broad Declines

Other precious metals also recorded losses on Friday. Spot silver fell 0.3% to US$63.39 per ounce. The metal has lost more than 4% for the week. Platinum eased 0.2% to US$1,773.93. Palladium dropped 0.3% to US$1,278.51. All three metals are headed for weekly declines. Source GN auto markets/commodities: gold prices reports these figures reflect current trading conditions. The broader metal sector faces headwinds from rising real yields and geopolitical uncertainty.