Gold Edges Up but Heads for Third Weekly Loss Ahead of US Inflation Report
Gold prices have been falling for three consecutive weeks and are expected to decline further ahead of the US inflation report due on Friday. Despite a slight increase, spot gold was down more than 2% for the week so far, trading at $4,324.79 per ounce.
The Producer Price Index for final demand rose 0.4% in August, leading traders to believe that the Federal Reserve will raise interest rates next week. This has put additional pressure on gold, which offers no yield and is sensitive to rising interest rates.
A stronger-than-expected inflation reading would further reinforce the case for multiple interest rate hikes, pushing Treasury yields and the dollar higher and weighing on gold. Rising Middle East tensions have also contributed to higher inflation expectations, putting downward pressure on the metal.