Gold Edges Higher as Dollar, Yields Pause, but Weekly Loss Looms

Gold prices rebounded modestly on Friday, pulling back from a one-week low as the US Dollar and Treasury yields eased. However, this brief respite may be short-lived, given the hawkish Federal Reserve expectations that remain a key headwind for gold.

The CME FedWatch Tool now shows around a 71% probability of a rate hike at the October meeting, driving up the US Dollar and Treasury yields across the curve. A stronger US Dollar makes gold more expensive for foreign buyers, while higher yields increase the opportunity cost of holding the non-yielding metal.

Next week's key data releases, including PCE inflation, ISM Manufacturing PMI, and Nonfarm Payrolls, could play a major role in shaping expectations for the Fed's October meeting. These events may have a significant impact on gold prices, given the current market sentiment.