Gold Set for Weekly Loss Amid Focus on US Rate Path

Gold prices are poised to record a weekly loss as traders assess the likelihood of the US Federal Reserve (the central bank) implementing further interest rate hikes this year, following a series of US inflation data points that came in higher than expected.

Bart Milik, head of global commodities strategy at TD Securities, said, “We are moving in a very narrow range, leaning toward minimal support. The main reason for this is the continued high level of uncertainty regarding what the Federal Reserve will decide.”

Federal Reserve Chair Jerome Powell expressed optimism about the strength of the US economy but provided no indications regarding the central bank’s interest rate trajectory.

Data released on Thursday showed that US producer prices recorded their largest increase in four and a half years last month.

The data followed Wednesday’s consumer price index report, which showed accelerating inflation in September.

Chicago Fed President Austan Goolsbee described the data as “disappointing,” while Cleveland Fed President Beth Hammack said the central bank may need to raise interest rates at a faster pace if there is a noticeable deterioration in public inflation expectations.

A CME Group FedWatch tool indicates that traders largely expect interest rates to remain unchanged this month, with a 90% probability of a rate hike in December.

Hamad Hussein, a climate and commodities economist at Capital Economics, said, “Gold prices are likely to gradually decline for the remainder of this year, as the Federal Reserve continues to raise interest rates and concerns about the end of the AI boom prove to be temporary.”

In other markets, gold traded at a premium in India for the first time in over three months this week, as lower prices boosted jewelry purchases.

As for other precious metals, spot silver fell 0.7% to $57.05 per ounce, while platinum remained steady at $1,626.15. Palladium dropped 1.1% to $1,113.61. All three metals are heading toward weekly losses.