Gold rose on Friday as bargain hunting emerged after prices hit a more than one-year low in the previous session, while market focus shifted to upcoming US inflation data.
Edgar Su | Reuters
Gold firmed on Friday as a US inflation reading came in largely in line with expectations, alleviating some bets on a bigger rate hike, but bullion’s selloff to a more than one-year low on Thursday kept it on track for a weekly decline on expectations of further Federal Reserve tightening.
Spot gold was up 0.6% at $3,898.84 an ounce, after briefly touching a session high of $3,922.97 when the U.S. producer price index data came out. U.S. gold futures for December delivery were up 0.5% at $3,903.00 an ounce.
The producer price index for final demand rose 0.3% last month after an upwardly revised 1.4% surge in September, data showed on Friday. A Reuters poll had forecast PPI climbing 0.4%.
“Gold is struggling to hold initial gains from PPI as bond markets continue to struggle confronted with Fed hawkishness. PPI didn’t surprise high like last month but core at 0.3% month-on-month remains too high for policymakers,” independent analyst Tai Wong said.
Gold prices slid 3% on Thursday, hitting a more-than-one-year low, as oil climbed, spurring fears of higher inflation and elevated interest rates. The fall was accentuated by hotter-than-expected Consumer Price Index data earlier this week.
Bullion shed more than 4% this week and logged its worst week since early June.
“It’s been a tough week for gold, which may struggle to retake $4,000 with Fed hawks out in force,” Wong added.
Markets see an 89.4% chance of a 25-basis-point U.S. rate hike in December, versus 96.2% before the PPI data, using the CME FedWatch tool. However, the probability of a larger 50-basis-point move is seen at 10.6%, slightly lower than the 13.8% chance before PPI.
Higher interest rates tend to diminish the appeal of gold, which pay no yield.
Among other metals, spot silver fell 0.2% to $49.91 an ounce, platinum fell 0.4% to $1,512.03, while palladium climbed 2.1% to $1,014.74.
All three metals also posted losses for the week.
