Gold Prices Stabilize as Fed Bets on Higher Rates Cap Rebound

Gold prices stabilized on Friday after a week of losses, but the precious metal's rebound was limited by rising Treasury yields and firm expectations for another interest rate hike from the Federal Reserve. At the time of writing, spot gold was trading near $4,289.70 an ounce, up 0.38% on the session.

The Fed's bets on higher rates capped bullion's rebound, with the 10-year Treasury yield reaching its highest level since 2007 at around 5.2%. The yield shock had put pressure on North American equities earlier in the week but they finished higher on Friday due to lower oil prices.

Oil prices fell as renewed U.S.-Iran diplomacy hopes reduced the immediate blockade premium in the Strait of Hormuz, a key oil shipping route. Brent crude settled at $104.32 a barrel, down 2.1%, while WTI settled at $92.41, down 2.3%. Lower crude is gold-positive at the margin because it eases the inflation impulse behind yields and the dollar.

The market positioning remains anchored in the conflict between resilient U.S. growth and sticky inflation expectations. The August durable-goods orders were unchanged after a 0.9% July gain, while non-defense capital goods orders excluding aircraft jumped 1.6%, consistent with continued AI-linked capital spending.