GLOBAL MARKETS — Gold prices retreated on Friday as rising oil costs renewed inflation concerns and increased expectations that interest rates could remain elevated for an extended period.
Spot gold dropped 1% to $4,047.19 per ounce by 0718 GMT. Despite the decline, the metal remained on track to post its strongest weekly performance since late August.
US gold futures for December delivery also fell, losing 1.4% to $4,056.90.
The rebound in oil prices has emerged as a key influence on the precious metals market. Crude oil gained more than 1%, although it was still expected to register a substantial weekly decline amid hopes of easing tensions linked to the Iran conflict.
However, continuing concerns about potential disruptions to Middle Eastern energy supplies provided support for oil prices.
More expensive oil can intensify inflationary pressures, potentially prompting the Federal Reserve to keep interest rates higher. Such an environment typically weighs on gold, which does not provide interest income to investors.
Gold’s decline was also influenced by unusual selling across precious metals markets. Following a significant selloff in technology stocks, some investors sold their gold holdings to generate cash and meet margin requirements in other positions.
The selling activity temporarily reduced gold’s traditional appeal as a safe-haven asset.
Ilya Spivak, head of global macro at Tastylive, identified the recovery in crude oil prices as one of the inflation-related pressures affecting gold.
Tim Waterer, chief market analyst at KCM Trade, said investors were disposing of gold positions to raise liquidity and meet margin calls.
Market attention was also focused on the US non-farm payrolls report, due to be released at 1330 GMT on Friday.
According to the CME FedWatch tool, traders were assigning a 67% probability to a Federal Reserve interest-rate increase in December.
Two Federal Reserve officials had also expressed support for gradual interest-rate increases as a way to tackle persistent inflation.
Meanwhile, Goldman Sachs revised its end-2026 gold price forecast downward to $4,150 per ounce from its previous estimate of $4,650, pointing to the Federal Reserve’s increasingly hawkish stance.
Other precious metals followed gold lower during Friday’s session. Spot silver declined 0.6% to $51.42 per ounce, platinum lost 0.5% to $1,509.17, and palladium fell 1.2% to $1,018.99.
Nevertheless, all three metals were still positioned to finish the week with gains despite their latest daily declines.
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