Gold prices climbed more than 1% on Friday as a pullback in the U.S. dollar and easing crude oil prices improved the outlook for the precious metal. Investors also considered ongoing inflation concerns and the possibility that the Federal Reserve could raise interest rates further.
Spot gold gained 1.4% to $4,190.57 per ounce by 0630 GMT. The increase followed a drop to a two-month low on Wednesday, leaving the metal on track to post a weekly gain.
U.S. gold futures for December delivery also rose 1.4% to $4,215.30.
Gold received support as the dollar paused its recent advance. Since bullion is priced in U.S. dollars, a weaker currency typically makes gold more affordable for buyers using other currencies, potentially boosting demand in international markets.
Declining oil prices also helped lift bullion. Energy costs had risen amid fears of disruptions to supplies from the Middle East. Those concerns eased after U.S. President Donald Trump said the United States would not attack Iran before the November midterm elections. He also pointed to productive discussions intended to bring the conflict to an end.
The connection between oil prices, inflation and interest rates remains a key consideration for gold investors. Higher energy costs can add to inflationary pressures, potentially prompting central banks to keep borrowing costs elevated. While gold is often viewed as a hedge against inflation, it does not pay interest, making it less appealing when interest rates increase.
Tony Sage, CEO of Critical Metals, said the possibility of further monetary tightening could continue to put pressure on gold. He noted that upcoming economic data and guidance could shape market sentiment ahead of the Federal Reserve’s October meeting. Weaker-than-expected figures could push yields lower and provide additional support for bullion.
The Federal Reserve increased its policy rate by a quarter of a percentage point last month. St. Louis Fed President Alberto Musalem has also suggested that further rate increases may be needed to return inflation to the central bank’s 2% target, although he did not specify what action should be taken later this month.
Data from CME’s FedWatch tool showed traders assigning a 17% probability to an interest-rate increase in October and an 83% probability to an increase in December.
Other precious metals also moved higher on Friday. Spot silver advanced 1.5% to $60.22 per ounce, platinum gained 2.7% to $1,677.80, and palladium climbed 3.3% to $1,159.70.
Upcoming economic releases could be the next major driver for bullion prices, giving investors more information about inflation trends and helping them assess the Federal Reserve’s potential response.
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