Gold firms as dollar softens, Fed rate path in focus
Gold prices rose on Friday as a softer US dollar and easing Treasury yields supported bullion, while market participants weighed lingering inflation concerns against the outlook for Federal Reserve interest rates. Spot gold was up 0.9% at $4,169.32 an ounce by 0137 GMT, having touched a two-month low on Wednesday. US gold futures also gained 0.9%, to $4,194.40.
The dollar's rally took a breather, making greenback-priced bullion more affordable for holders of other currencies, while the benchmark 10-year Treasury yield slipped for a second straight session. Gold is traditionally seen as a hedge against inflation, though higher interest rates diminish the appeal of the non-yielding asset.
Tony Sage, chief executive of Critical Metals, said possible tightening later on could keep gold at risk, particularly as inflation fears remain high after a rise in oil prices on increased Middle East supply disruption risks, adding that ongoing central bank demand may limit losses. He said traders would watch upcoming economic data for further monetary policy clues and sentiment ahead of the Federal Reserve's October meeting.
Last month the US central bank voted unanimously to raise the policy rate by a quarter of a percentage point. St. Louis Fed President Alberto Musalem said the central bank will need to hike rates again to bring inflation back to its 2% target, although he declined to say what policymakers should do at their meeting later this month. Traders were pricing in an 18% chance of a rate hike in October and an 82% probability of an increase in December, according to CME's FedWatch tool.
Spot silver rose 1.1% to $60.00, platinum gained 2.2% to $1,670.15 and palladium climbed 2.1% to $1,146.98, but all three metals were on track for weekly losses. President Donald Trump said the US will not launch an attack on Iran before November's midterm congressional elections, asserting that the two countries are having productive talks about ending the six-month-old war.
