Gold heads for weekly loss as traders weigh more Fed rate hikes

what happened

Gold prices are on course for a weekly loss as traders consider the possibility of further Federal Reserve rate increases this year. The move follows US inflation figures that came in hotter than expected. According to TradingView, spot gold rose 0.1% to $4,175.66 an ounce on Friday but was still down 0.4% for the week.

Bart Melek, global head of commodity strategy at TD Securities, said the market remains range-bound and leans toward the lower end of support because the Fed's next steps are unclear. Fed Chair Kevin Warsh expressed confidence in US economic strength but offered no guidance on the path of rates. US producer prices rose at the fastest pace in four and a half years last month, after consumer prices accelerated in September.

why it matters

Gold is typically viewed as an inflation hedge, but higher interest rates reduce the appeal of a metal that pays no yield. CME FedWatch data show traders price about a 90% chance of a December rate hike. Silver, platinum and palladium are also heading for weekly losses.

market impact

Gold and precious metals: expected Fed tightening pressures prices via higher yields

tags

instruments