Gold is on track for a third consecutive weekly decline, with prices hovering around $4,315 an ounce on Friday. This downward trend follows a 1.8% drop in the previous session, bringing gold to its lowest point since early August. The primary drivers behind this slump are surging oil prices and the latest US inflation data, which have increased the likelihood of the Federal Reserve raising interest rates in the upcoming week.
The US producer price index (PPI) saw a 0.4% increase last month, marking its largest rise since May. This data, released on Thursday, has strengthened the case for a more hawkish stance from the Federal Reserve. Higher inflation figures typically lead to central banks tightening monetary policy, which in turn diminishes the appeal of non-interest-bearing assets like gold.
While gold saw a slight rise in early Asian trade, reaching $4,337.94 per troy ounce, it was largely due to a weaker dollar. However, analysts note that the precious metal remains vulnerable to price swings from near-term risks, including continued increases in oil prices and geopolitical developments in the Middle East. Market projections, according to CME's FedWatch tool, indicate a nearly 70% chance of a rate hike by the Federal Reserve at its meeting next week.
