Gold Prices Plummet as Hawkish Fed Weighs on Non-Yielding Metal

Gold prices have taken a hit, plummeting by 0.8% to $4,145.68 per ounce on Friday, and are now poised for a weekly decline of about 3.3%. The drop comes as a stronger US dollar and higher US Treasury yields weighed heavily on the non-yielding metal.

The recent data release showing slower-than-expected job growth in September may have initially boosted gold prices by over 1%, but the gains were short-lived. Instead, gold bugs seem to be holding back, awaiting further cues from the Federal Reserve.

Han Tan, chief market analyst at Bybit, pointed out that the Fed still retains a hawkish bias, and much of gold's trajectory in the months ahead will depend on how willing the Fed is to tolerate labor market weakness in pursuit of taming US inflation.

With traders now giving only a 22% chance of a US rate hike this month - down from around 70% earlier in the week - investor bets are shifting towards interest rates remaining on hold later this month. As such, gold's prospects for recovery appear uncertain at best.