Gold climbs over 1% as dollar and US yields retreat

Gold prices surged by more than 1% on Friday, supported by a decline in the US dollar, falling returns on American Treasury bonds, and dropping crude oil prices. Investors are currently weighing inflation concerns alongside the Federal Reserve’s potential interest rate trajectory.

Spot gold and futures gains

By 0753 Abu Dhabi time, spot gold had climbed 1.1% to reach $4,177.44 per ounce. This recovery followed a two-month low recorded earlier in the week on Wednesday. Concurrently, US gold futures advanced by 1.1%, settling at $4,202.00.

The greenback halted its upward movement, making bullion priced in dollars less expensive for holders of other currencies. Additionally, yields on 10-year US Treasury notes declined for a second consecutive session.

Oil drop and Fed policy outlook

Crude oil prices fell as worries over Middle East supply disruptions eased somewhat. This shift occurred after US President Donald Trump stated that Washington would not launch an attack on Iran before the November congressional midterm elections, noting productive talks aimed at ending hostilities between the two nations.

Last month, the central bank voted unanimously to increase interest rates by a quarter percentage point. Alberto Musalem, president of the Federal Reserve Bank of St. Louis, indicated that further rate hikes might be necessary to bring inflation back to the 2% target. However, he refrained from specifying the policy actions expected at the meeting scheduled for later this month.

Data from CME Group’s FedWatch tool shows traders assigning a 17% probability to a US rate hike in October and an 83% likelihood for December.

Other precious metals performance

Silver rose 1.4% in spot trading to hit $60.16. Platinum gained 2.6% to trade at $1,676.67, while palladium increased 2.8% to reach $1,154.70. Despite these daily advances, all three metals remain on track for weekly losses.