Gold Prices Rebound as Dollar Rally Takes a Breather

The gold price has bounced back to near $4,307 an ounce on Friday after reaching a one-week low of around $4,244. Silver is also up, trading at approximately $64.92 per ounce, having gained more than 1.7% on the day.

This surge comes as the US Dollar Index and Treasury yields have paused in their ascent to fresh multi-month and multi-year highs. The 10-year Treasury yield has eased to around 5.15%-5.17%, down from its peak of 5.22% on Thursday, which was the highest level since 2007.

The CME FedWatch Tool now predicts a 71% probability of another Federal Reserve rate hike in October, up from about 50% just a week ago. This increased likelihood has put upward pressure on yields and the dollar, weighing down gold and silver prices throughout the week.

Despite today's bounce, both metals are still expected to post a net weekly loss due to the earlier climb in yields and the dollar outweighing the current pullback. The market is keeping a close eye on upcoming data releases, including the final University of Michigan Consumer Sentiment reading later this Friday, which could move the October-hike odds meaningfully.