Gold hits one-week high, heads for weekly gain on bargain-hunting

Gold prices surged to a one-week high on Friday, catapulting toward a 1.2% weekly increase. This upward momentum emerged from bargain-hunting activities after the precious metal plummeted to a two-month low earlier in the week, amid traders' deliberations on potential future US Federal Reserve rate hikes. Spot gold's value climbed by 1.4% to $4,190.49 by 11:44 a.m. EDT, setting the stage for a weekly gain of approximately 1.2%.

Throughout the week, the metal experienced a dip to a two-month low on Wednesday, as a stronger dollar and escalating US Treasury yields dented the non-yielding asset. The December delivery of US gold futures also experienced a 1.4% rise, trading at $4,215.60 per ounce. Market analyst Rhona O'Connell noted that bargain buying at the lows contributed to the gold's rise, as a support level has been established in the $4,000 range.

Despite the Fed's potential rate hike, analysts suggest that investors should be wary of a convincing upward move in gold without a Black Swan event. US 10-year Treasury yields retreated over a 20-year high, setting the stage for the Federal Reserve's potential rate hikes. In the coming week, the CPI release may serve as a catalyst for gold's next significant movement.

Han Tan, a chief market analyst at Bybit, predicts that persistent inflation could force the Federal Reserve into an even steeper rate-hike cycle, potentially pulling gold back to the $4,000 support level once again. While other metals like silver, platinum, and palladium also saw gains, gold remained the focus for traders, with the overall market outlook remaining uncertain.