Gold heads for weekly decline amid expectations of US interest rate hike

Gold prices saw little change at the start of trading on Friday, as markets weighed inflation risks stemming from the latest military escalation between the United States and Iran, while renewed expectations of interest rate hikes pushed the non-yielding metal toward a weekly decline.

By 00:47 GMT, the spot price of gold stood at $4,122.09 per ounce, on track for a weekly loss of more than 1 percent.

The Iranian armed forces launched attacks on U.S. military infrastructure in Gulf states on Thursday, following American strikes on coastal areas in southern and eastern Iran, further straining a ceasefire agreement reached three weeks ago.

The latest round of strikes fueled inflation concerns and bolstered the likelihood that the Federal Reserve will raise U.S. interest rates this year.

According to CME Group’s FedWatch tool, markets are pricing in a 64 percent probability of an interest rate hike in September, up from about 54 percent two weeks ago.

This week, the minutes of the Federal Reserve’s June meeting revealed growing concerns among policymakers about rising inflation, with only a few seeing justification for raising interest rates. New York Fed President John Williams ruled out a sustained increase in energy prices for the remainder of the year, despite renewed fighting in the Middle East.

The number of Americans filing new weekly unemployment claims fell last week, suggesting the labor market remained stable despite a slowdown in job growth in June.

In other precious metals, spot silver fell 0.1 percent to $59.94 per ounce, platinum rose 0.2 percent to $1,614.22, and palladium increased 0.4 percent to $1,252.75.