Gold prices remained relatively stable during Friday’s (Oct 16) trading session but are still headed for a weekly decline as investors weigh the possibility of a Federal Reserve interest rate hike, following a series of U.S. inflation data points that came in higher than expected. Spot gold edged down 0.1% to US$4,165.12 per troy ounce, marking a decline of approximately 0.7% for the week, while U.S. gold futures for December delivery closed 0.3% higher at US$4,181.10.
Gold’s movement remains constrained as the market lacks clarity regarding the direction of the Fed’s policy. Fed Chair Kevin Warsh expressed optimism about the resilience of the U.S. economy but offered no hints regarding the next move on interest rates, leaving investors cautious about taking on new positions.
Pressure on gold intensified after the U.S. Producer Price Index (PPI) recorded its largest increase in four and a half years, following Consumer Price Index (CPI) data that also indicated an acceleration in inflation during September. Chicago Fed President Austan Goolsbee described these developments as disappointing, while Cleveland Fed President Beth Hammack suggested the possibility of more aggressive tightening should public inflation expectations deteriorate.
The market currently largely anticipates that the Fed will hold interest rates steady at its October meeting, but it is pricing in a roughly 90% probability of a rate hike in December. The prospect of higher borrowing costs serves as a primary headwind for gold, as the precious metal does not generate a yield.
Elsewhere in the metals market, silver fell 0.7% to US$57.05 per ounce, platinum held steady at US$1,626.15, and palladium weakened by 1.1% to US$1,113.61. All three metals are also heading for weekly losses, reflecting broader pressure on the precious metals market amid expectations that U.S. monetary policy will remain tight.
Source: Newsmaker.id