Gold Prices Tumble Towards Third Weekly Loss on Interest Rate Hopes

Gold prices are heading for their third consecutive weekly loss as market expectations for a Federal Reserve interest rate hike strengthen. Despite edging higher on Friday, spot gold was down more than 2% for the week and up 0.3% for the day at $4,326.88 per ounce by 0020 GMT.

The US Producer Price Index for final demand rose 0.4% in August, following a 0.1% gain in July. This has led traders to nudge up bets that the Fed will raise interest rates next week, pushing Treasury yields and the dollar higher and placing pressure on gold.

A strong inflation reading would reinforce the case for several interest rate increases, said Wael Makarem, financial markets strategist lead at Exness. Ongoing Middle East tensions could continue to weigh on gold through higher inflation expectations.