Gold heads for sharpest weekly decline in four months on Fed rate outlook

Spot gold prices slipped on Friday, signaling the metal's sharpest weekly decline in over four months as surging oil prices and robust US economic data prompted expectations of extended higher interest rates from the Federal Reserve. The precious metal fell 0.1% to $4,018.69 per ounce by 0036 GMT, marking its lowest level since August 3 and a 3.4% weekly decline.

US gold futures for December delivery slipped 0.6% to $4,033.70. Oil prices surged nearly 4% to a five-month high on Thursday, following Houthi attacks in Saudi Arabia, raising concerns about potential disruptions to energy supplies. The drop in oil prices increased the opportunity cost of holding non-yielding bullion, as investors anticipate a higher-for-longer interest rate environment by the Fed.

Job market data showed a drop in new unemployment claims for Americans to near a 57-year low last week, indicating a slight increase in job growth in October. The focus now shifts to the Fed's policy meeting on October 27-28 and next week's Personal Consumption Expenditures (PCE) data, a key inflation indicator. Traders are pricing in a 7% chance of a rate hike next week, but expectations for a December hike remain high at 81%.

India has issued permits for around 6,500 metric tons of silver imports over the next six months to meet festive-season demand. HSBC reduced its 2026 platinum and palladium price forecasts, citing changing market fundamentals and investor liquidation. Silver edged 0.1% lower to $54.46 per ounce, platinum dropped 0.4% to $1,563.67, and palladium declined 0.5% to $1,051.00, all showing weekly declines.