Gold Tumbles Despite Middle East Tensions

Gold prices inched up on Friday but remained on track for a third consecutive weekly decline as investors awaited US consumer inflation data that could determine whether the Federal Reserve raises interest rates next week.

The spot gold price rose by 0.4% to around $4,338 an ounce in Asian trading after plummeting sharply on Thursday. Despite this small gain, bullion is down more than 2% for the week due to higher Treasury yields and increased expectations of rate hikes.

Samer Hasn of XS.com noted that gold's value is being squeezed by rising global bond yields and a Middle East conflict driving up oil prices and inflation expectations. Geopolitical tensions, which normally support gold, are currently strengthening the case for tighter monetary policy through higher energy costs.

Friday's consumer-price report will be a crucial test of market expectations, with consensus estimates suggesting headline CPI will rise by 3.3% from a year earlier, and core inflation at 2.4%. Markets have already pushed the probability of a September Fed hike to around 70%.