Gold Gains as Dollar and Yields Retreat
Gold prices advanced on Friday, supported by a weaker US dollar and declining Treasury yields, which enhanced the appeal of the non-yielding metal. Spot gold climbed 0.9% to $4,169.32 per ounce by 0137 GMT, recovering from a two-month low reached on Wednesday. US gold futures also rose 0.9% to $4,194.40. The dollar's upward momentum stalled, making greenback-priced bullion more affordable for buyers using other currencies, while the benchmark 10-year Treasury yield fell for a second consecutive session.[S1][S2][S3][S4][S5][S6]
Fed Policy and Inflation in Focus
Market participants are weighing persistent inflation against the Federal Reserve's interest rate trajectory. Tony Sage, CEO of Critical Metals, noted that potential tightening later could keep gold under pressure, especially with inflation fears elevated amid rising oil prices following increased Middle East supply disruption risks. He added that ongoing central bank demand may limit losses. Sage also said traders will watch upcoming economic data for monetary policy clues ahead of the Fed's October meeting.[S1]
In a unanimous decision last month, the US central bank lifted its policy rate by 0.25 percentage points. St. Louis Fed President Alberto Musalem stated that further rate increases will be necessary to steer inflation back to the 2% goal, but he would not say what action officials should take at this month's meeting. CME's FedWatch tool shows traders assigning an 18% likelihood to an October hike and 82% to one in December. Gold is often viewed as an inflation hedge, yet higher rates reduce the attractiveness of the non-yielding metal.[S1]
Geopolitical Developments and Other Metals
President Donald Trump indicated the US will hold off on striking Iran until after November's midterm congressional elections, saying the two nations are engaged in constructive discussions aimed at halting the six-month-old conflict. Among other metals, spot silver advanced 1.1% to $60.00, platinum added 2.2% to reach $1,670.15, and palladium was up 2.1% at $1,146.98. Even so, each of the three was headed for a loss over the week.[S1]
