Gold posts weekly loss as markets await US interest rate signals

Gold prices appeared stable on Friday, setting the stage for a weekly decline as traders considered the possibility of additional Federal Reserve rate hikes this year, following a series of more significant-than-expected US inflation data. Spot gold dipped 0.1% to $4,165.12 per ounce by 02:07 p.m. EDT (1807 GMT), yet was down 0.7% for the week.

Gold futures for December delivery ended 0.3% higher at $4,181.10 per ounce. Experts are cautiously optimistic, with Bart Melek, TD Securities' global commodity strategy head, stating that the market is "very much rangebound and tilting toward the lower bound of support." Federal Reserve Chair Kevin Warsh highlighted his belief in US economic robustness but provided no insights into the central bank's future rate trajectory.

US producer prices rose to their highest level in 4.5 years last month, while consumer prices accelerated in September. Federal Reserve Bank of Chicago President Austan Goolsbee expressed disappointment with the data, while Federal Reserve Bank of Cleveland President Beth Hammack suggested the Fed might need to raise interest rates more aggressively if there were a noticeable deterioration in public inflation expectations.

Traders anticipate the US central bank to maintain steady rates this month, with a 90% probability of a rate increase in December, according to the CME's FedWatch Tool. Although gold is traditionally viewed as an inflation hedge, higher interest rates tend to diminish its appeal due to its non-yielding nature. Over the course of the year, gold prices are expected to gradually fall as the Fed continues to raise rates and concerns about the end of the AI boom prove to be temporary, according to Capital Economics' climate and commodities economist Hamad Hussain.

Elsewhere, gold traded at a premium in India for the first time in over three months due to a price decline boosting jewelry purchases. Among other metals, spot silver fell 0.7% to $57.05 per ounce, platinum remained unchanged at $1,626.15, and palladium decreased 1.1% to $1,113.61, all three metals heading for weekly losses.