Gold prices climbed on Friday as the US dollar weakened and Treasury yields dropped, making the precious metal more attractive to investors. Spot gold increased by 0.9% to $4,169.32 per ounce, recovering from a two-month low hit earlier in the week. US gold futures also rose by 0.9% to $4,194.40.
The dollar’s recent rally paused, reducing the cost of gold for international buyers. Meanwhile, the 10-year Treasury yield declined for the second straight session, adding to gold’s appeal. However, concerns about inflation and potential future interest rate hikes by the Federal Reserve kept some caution in the market.
Tony Sage, CEO of Critical Metals, noted that while ongoing central bank demand could support gold prices, lingering inflation fears and rising oil prices due to Middle East supply disruptions pose risks. Investors are now focusing on upcoming economic data ahead of the Fed’s October meeting.
Last month, the Fed raised interest rates by 0.25%, and St. Louis Fed President Alberto Musalem suggested further hikes may be necessary to control inflation. Traders currently see an 18% chance of a rate hike in October and an 82% probability in December, according to CME’s FedWatch tool.
Other precious metals also saw gains, with spot silver up 1.1% to $60.00, platinum rising 2.2% to $1,670.15, and palladium climbing 2.1% to $1,146.98. Despite these increases, all three metals were on track for weekly losses.