According to CNBC, gold rose in instant transactions by 0.2% to $4,324.79 per ounce by 00:20 GMT, but it remained down by more than 2% during the week. On the other hand, US gold futures for December delivery fell 1% to $4,364.70.
Traders are awaiting the release of the US Consumer Price Index report at 12:30 GMT, searching for additional indicators regarding the next path of Federal Reserve policy.
Thursday’s data showed the producer price index for final demand rose 0.4% in August, after a revised increase to 0.1% in July. After the release of these data, traders raised their bets that the Federal Reserve may move to increase interest rates at its meeting next week, which pushed gold to fall by about 2%.
Wael Makarem, chief financial markets strategist at Exness, said that a stronger-than-expected inflation reading will strengthen the justification for raising interest several times, and may push Treasury bond yields and the dollar higher, putting additional pressure on gold.
He added that the ongoing tensions in the Middle East may also put pressure on gold by increasing inflation expectations.
Although gold is usually known as an inflation hedge, rising interest rates put pressure on it because it does not generate a return, which makes interest-bearing assets more attractive to investors.
The movements in the markets coincide with an escalation in the Red Sea, after the Houthis, allied with Iran, took control of the coastal city of Mokha in Yemen and advanced along the coast towards strategic islands, according to military sources.
Oil prices also rose, and the two main crude oils are heading to end the week above $100 per barrel for the first time since mid-May.
In other metals, spot silver fell 0.3% to $63.39 per ounce, losing more than 4% during the week. Platinum also fell 0.2% to $1,773.93, and palladium fell 0.3% to $1,278.51, with both metals also tending to record weekly losses.
Gold’s movement remains hostage to two opposing factors: geopolitical tensions that support demand for safe havens, and expectations of an interest rate hike that boost the dollar and yields and put pressure on the yellow metal.
