Gold Falls Despite Middle East Tensions as Rate Hike Expectations Rise

Gold prices rose slightly on Friday but remain on track for their third consecutive weekly decline. The metal's value is being weighed down by higher US Treasury yields and expectations of a September rate hike from the Federal Reserve. According to Samer Hasn of XS.com, gold is being squeezed by these factors as well as rising energy costs due to Middle East tensions.

The producer price index rose 0.4% in August, with goods prices climbing 1.1%, led by energy. This has pushed Treasury yields higher and sent gold lower. The 10-year yield climbed towards 4.97%, while the 30-year yield rose above 5.3%. Friday's consumer-price report is now the immediate test for gold.

The World Gold Council reported that global gold-backed ETFs attracted $18 billion in August, the second-largest monthly inflow on record. Holdings rose by 121 tonnes to a record 4,189 tonnes, while assets under management reached $615 billion. Central banks also remained net buyers in July, adding 23 tonnes, with China and Poland among the largest purchasers.