Gold Prices Rise but Remain Vulnerable to Rate Hike Expectations

Gold prices rose on Friday but are still on track for a weekly loss due to increasing expectations of Federal Reserve rate hikes. Spot gold was up 0.6% to $4,304.71 per ounce by 10:43 GMT, but down about 1.7% this week.

Higher US Treasury yields and growing expectations of Fed rate hikes weighed on the metal. The Fed raised interest rates last week for the first time in three years, flagging more hikes to come. Traders are pricing in a 71% chance of an October hike and a 95% chance of an increase in December.

Nikos Tzabouras, a senior market analyst at Jefferies-owned Tradu.com, said gold finds support as oil prices pull back on renewed hopes for a US-Iran deal. However, the precious metal is heading for weekly losses due to higher Fed rates and bond yields raising the opportunity cost of holding gold.