Gold prices saw a slight increase on Friday, driven by a weaker US dollar, but the metal remained on track for a modest weekly decline. Spot gold rose 0.2% to $4,177.82 per ounce by 0433 GMT, while US gold futures for December delivery climbed 0.7% to $4,199.10. Despite the daily gain, gold was down 0.5% for the week as investors assessed signals from the Federal Reserve regarding interest rates.
Kelvin Wong, a senior market analyst at OANDA, noted that gold has been trading within a range of $4,221 to $4,075, with the lower end of the range tested earlier in the week. Inflationary trends remained strong, with core CPI and core PPI data for September exceeding expectations. The US dollar was poised for its first weekly drop in five weeks, making gold more affordable for international buyers.
US producer prices surged by the most in 4-1/2 years in September, driven by rising costs for goods and services. This followed Wednesday's consumer price report, which showed accelerating prices due to higher gasoline costs. Traders are pricing in a 28% chance of a rate hike later this month and an 89% probability of an increase in December, according to CME's FedWatch Tool. Fed officials, including Chicago Fed President Austan Goolsbee and Cleveland Fed President Beth Hammack, expressed concerns about inflation expectations.
Higher interest rates typically reduce the appeal of gold, as it does not offer yields. In India, several large mutual funds suspended bulk subscriptions to gold exchange-traded funds ahead of the festive season, a period typically marked by increased investor demand. Other precious metals like silver, platinum, and palladium also saw gains on Friday but were headed for weekly losses.