Gold is on track for its third consecutive weekly decline, trading near $4,315 an ounce on Friday. This comes after a 1.8% drop in the previous session, pushing prices to their lowest since early August. The downward pressure on gold is attributed to surging oil prices and recent US inflation data, which have increased the likelihood of the Federal Reserve raising interest rates at its upcoming meeting.
The US producer price index (PPI) rose by 0.4% last month, marking the largest increase since May. This data, released on Thursday, has strengthened the case for the Federal Reserve to implement a rate hike, as higher interest rates typically make non-yielding assets like gold less attractive to investors.
While gold has seen some intraday fluctuations, geopolitical developments, such as those in the Persian Gulf, are currently of secondary importance to its price movements. Instead, gold's performance is primarily influenced by the interplay between interest rate expectations, inflation concerns, and the strength of the US dollar. A weaker dollar can make dollar-priced gold more appealing to international buyers, but the prevailing sentiment is being driven by the anticipation of tighter monetary policy.
