Gold rebounds after a two-month low
Gold rose more than 1% on Friday, supported by a softer US dollar and lower oil prices. Investors were also weighing persistent inflation concerns and the outlook for Federal Reserve interest rates.
Spot gold rose 1.4% to $4,190.57 per ounce by 0630 GMT. Prices had hit a two-month low on Wednesday, but the latest recovery put gold on track for a weekly gain.
US gold futures for December delivery gained 1.4% to $4,215.30. The dollar’s rally paused, making gold priced in dollars more affordable for buyers using other currencies.
Oil prices and inflation remain important
Oil prices fell as concerns about Middle East supply eased. President Donald Trump said the United States would not attack Iran before the November midterm elections. He also referred to productive talks aimed at ending the war.
However, inflation risks remained in focus. Tony Sage, chief executive of Critical Metals, said possible monetary tightening could keep gold at risk. He added that traders would watch upcoming economic data for clues ahead of the Federal Reserve’s October meeting.
Sage also said softer economic figures or guidance could push yields lower and support gold prices.
Federal Reserve policy shapes the outlook
Last month, the US central bank voted unanimously to raise its policy rate by a quarter of a percentage point.
St. Louis Fed President Alberto Musalem said the central bank would need to raise rates again to bring inflation back to its 2% target. He declined to say what policymakers should do at their meeting later in October.
According to CME’s FedWatch tool, traders were pricing in a 17% chance of a rate increase in October and an 83% probability of an increase in December.
Gold is traditionally seen as a hedge against inflation. However, higher interest rates reduce its appeal because the metal does not pay interest.
Other precious metals also advance
Other precious metals rose alongside gold. Spot silver gained 1.5% to $60.22 per ounce. Platinum rose 2.7% to $1,677.80, while palladium climbed 3.3% to $1,159.70.
