Gold set for a weekly drop as traders assess Fed signals
Traders largely expect the US central bank to hold rates steady in October
Gold prices began a weekly decline as traders considered potential further interest rate hikes from the US Federal Reserve. Spot gold rose 0.1% at $4,175.34 per ounce by midday GMT, but fell 0.4% over the week. December gold futures rose 0.7% to $4,198.20 per ounce. Analyst Bart Melek expressed uncertainty about the Fed's rate direction, stating, "We’re very much rangebound and tilting towards the lower bound of support."
Federal Reserve Chair Kevin Warsh expressed optimism about the US economy but offered no clues about the central bank's path. Data showed producer prices in the US rose for the first time in four and a half years in September, following a report of accelerating consumer prices in the same month. Austan Goolsbee, president of the Federal Reserve Bank of Chicago, called the data "discouraging," while Beth Hammack, president of the Bank of Cleveland, suggested the Fed may need to raise rates more aggressively.
The CME's FedWatch Tool gave a 90% chance of a December rate hike, with traders anticipating a steady rate in October. Despite being traditionally viewed as an inflation hedge, higher interest rates diminish gold's appeal. Economist Hamad Hussain predicts gold prices will decline over the year due to continued Fed rate hikes and fading AI boom expectations.
In India, gold traded at a premium this week for the first time in over three months, driving up jewelry sales. Other metals, including silver, platinum, and palladium, also posted weekly losses.
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Also reported by 2 other outlets
- Gold set for a weekly drop as traders assess Fed signals economictimes.indiatimes.com
- Gold posts weekly loss as markets await US interest rate signals english.ajel.sa
