Gold on track for third weekly loss as US inflation data looms

Gold prices edged higher on Friday (Sep 11) but were on track for a third consecutive weekly loss as expectations of a US rate hike intensified. Traders were awaiting the release of US consumer price index data for further insights into the US Federal Reserve's policy direction. Spot gold was up 0.2% at US$4,324.79 per ounce by 0020 GMT, but down over 2% for the week.

US gold futures for December delivery were down 1% at US$4,364.70. Producer price index for final demand in August rose 0.4% after an upward revision of 0.1% in July. This prompted traders to increase bets that the Fed would raise interest rates at their upcoming meeting, causing spot gold to fall nearly 2%. Financial markets strategist Wael Makarem explained that stronger-than-expected figures could reinforce the case for multiple interest rate hikes, potentially pushing Treasury yields and the US dollar higher and placing additional pressure on gold.

While gold is traditionally viewed as an inflation hedge, rising interest rates typically weigh on the metal, which does not generate yield. In other news, Iran-aligned Houthis seized control of Yemen's port city of Mocha and advanced down the Red Sea coast to strategic islands, hours after US President Donald Trump expressed optimism about ending the Iran war after the midterm elections.

Oil prices climbed, with both major benchmarks set to close the week above US$100 per barrel for the first time since mid-May. Silver fell 0.3% to US$63.39, losing more than 4% for the week, while platinum eased 0.2% at US$1,773.93 and palladium dropped 0.3% to US$1,278.51, both metals heading for weekly declines.