Gold Struggles Amid Ongoing Inflation Pressures and Rising Rate Hike Bets

Spot gold prices inched up to $4,328.30 an ounce on Friday in Singapore but were still headed for their third weekly decline of 2.3%. This comes as surging oil prices and the latest US inflation report boost the case for a Federal Reserve interest rate hike next week.

The US producer price index rose 0.4% last month, its highest increase since May, according to data released on Thursday. Higher crude costs are driving this growth in energy prices, which is putting pressure on inflation and fueling concerns that it could persist.

Benchmark Brent crude has pushed up to near $108 a barrel due to escalating tensions in the Middle East, including hostilities between Iran and the US. This has sent bond yields surging after lower-than-expected purchases by the US Treasury Department during its first expanded buyback operation. With gold's lack of interest-bearing potential making it less attractive when yields are high, investors are closely watching the market.

The upcoming release of the US consumer price index on Friday will provide further clues to Fed policy ahead of its September 14-15 meeting. Currently, swaps traders are pricing in a roughly 70% chance of a rate hike.