Gold gains on softer dollar, but heads for weekly fall

Gold experienced a minor increase on Friday as the US dollar weakened, but it appeared poised for a slight weekly decline amid mixed signals from the Federal Reserve regarding interest rates. Spot gold increased by 0.2% to $4,177.82 per ounce by 0433 GMT, yet it trailed behind a 0.5% weekly loss. US gold futures for December delivery rose 0.7% to $4,199.10.

Kelvin Wong, a senior market analyst at OANDA, observed that gold had been confined within a $4,221 range, with the lower boundary touching $4,075 earlier in the week. Inflationary trends continue to be a concern, as September's core CPI and PPI data exceeded expectations.

The US dollar anticipated its first weekly decline in five weeks, rendering greenback-priced bullion more accessible for international buyers. US producer prices surged to their highest level in 4-1/2 years in the previous month, reflecting the broadening of inflationary pressures beyond energy-related products. This development followed Wednesday's consumer price report, which indicated a sharp acceleration in prices in September, primarily driven by a surge in gasoline costs.

Traders are pricing in a 28% chance of a rate hike later this month and an 89% likelihood of an increase in December, according to CME’s FedWatch Tool. Chicago Fed President Austan Goolsbee described the latest inflation data as "discouraging," while Fed Bank of Cleveland President Beth Hammack suggested that the Fed may need to raise rates more aggressively if there is a significant shift in public inflation expectations.

Gold is generally viewed as a hedge against inflation, but higher interest rates diminish its attractiveness as a non-yielding asset. In India, several significant mutual funds issued public notices on Thursday suspending bulk subscriptions to gold exchange-traded funds, just before the festive season when investor demand typically surges. Silver, platinum, and palladium, among other metals, also experienced weekly losses.