Gold Fell 3.4% This Week
The spot price of gold, after hitting its lowest level since July 1 in early trading on Friday, later rose 0.3% to $3,980.64 per ounce. Meanwhile, U.S. gold futures for August delivery fell 0.2% to $3,984.10 per ounce.
However, the precious metal has declined 3.4% since the beginning of the week, marking its largest weekly drop since June 1.
Tim Waterer, Chief Market Analyst at KCM Trade, said: “Even with weaker-than-expected Consumer Price Index (CPI) and Producer Price Index (PPI) figures, the rise in oil prices this week prevented traders from placing greater emphasis on easing inflation. Geopolitical risks in the Middle East remain elevated, while concerns over inflation and bond yields continue to be the main factors limiting gains in gold prices.”
Oil prices have risen by around 12% since the start of the week. The increase has intensified inflation concerns and strengthened expectations of higher interest rates. Higher interest rates reduce the appeal of gold as a non-yielding asset.
Lorie Logan, President of the Federal Reserve Bank of Dallas, became the first among the new colleagues of Federal Reserve Chair Kevin Warsh to openly call for an interest rate hike. Meanwhile, Federal Reserve policymaker Philip Jefferson said he would support raising interest rates if inflation does not improve in the short term.
According to Reuters, the CME FedWatch Tool indicates that traders are pricing in a 73% probability of a U.S. interest rate hike in December.
In other precious metals, spot silver fell 0.6% to $55.20 per ounce. Platinum declined 1.1% to $1,599.17 per ounce, while palladium slipped 0.4% to $1,244.16 per ounce.