Gold prices advanced more than 1% on Friday, bolstered by a softening US dollar and a concurrent decline in global oil prices. Investors are actively reassessing inflation risks and the Federal Reserve’s trajectory for further interest rate hikes, driving renewed appetite for safe-haven assets.
Spot gold gained 1.4%, climbing to $4,190.57 per ounce by 0630 GMT. The surge marks a solid recovery from a two-month low recorded on Wednesday, putting bullion on track for a notable weekly gain. Concurrently, US gold futures for December delivery increased by 1.4% to settle at $4,215.30.
The US dollar’s recent rally cooled during the session, making greenback-priced gold more affordable for international buyers holding other currencies. Meanwhile, global oil prices declined as immediate concerns over Middle Eastern supply disruptions moderated. US President Donald Trump remarked that Washington would not initiate an attack on Iran prior to November’s midterm congressional elections, citing “productive discussions” aimed at de-escalating the conflict.
Federal Reserve Policy Outlook and Inflation Risks
Market attention remains heavily fixated on the US Federal Reserve following its September decision to raise interest rates by 25 basis points. St. Louis Federal Reserve President Alberto Musalem noted that further monetary tightening may be necessary to steer US inflation back to the central bank’s core target of 2%. However, Musalem refrained from providing specific policy guidance for the upcoming October meeting.
According to the CME FedWatch tool, traders are currently pricing in a 17% probability of a rate hike in October, compared to a dominant 83% probability of an increase at the December meeting.
“Weaker economic readings or softer policy guidance could put downward pressure on bond yields and support bullion prices.” — Tony Sage, Chief Executive Officer, Critical Metals
Sage emphasized that the overarching threat of further monetary tightening continues to act as a counterweight to gold’s upward momentum. While gold is traditionally viewed as a primary hedge against inflation, elevated interest rates increase the opportunity cost of holding non-yielding bullion.
Despite this macroeconomic headwind, the broader precious metals complex posted robust gains across the board, led heavily by industrial-leaning metals.