Gold is on track for its third consecutive weekly decline, with prices hovering around $4,315 an ounce on Friday. This follows a 1.8% drop in the previous session, bringing gold to its lowest point since early August. The primary drivers behind this downward trend are surging oil prices and recent US inflation data, which together bolster expectations for the Federal Reserve to increase interest rates next week.
The latest US economic indicator, the producer price index, showed a 0.4% increase last month, marking its largest rise since May. This data, released on Thursday, contributes to the growing belief that the Federal Reserve will adopt a more hawkish stance in its upcoming meeting.
Rising oil prices, coupled with the inflation report, create an environment where higher interest rates become more likely. This scenario typically makes non-yielding assets like gold less attractive to investors, as the opportunity cost of holding gold increases when interest-bearing assets offer better returns. Consequently, gold has experienced downward pressure throughout the week, solidifying its position for a weekly loss.
