Gold hovered near $4,300 an ounce on Friday, stabilizing after a nearly 2% drop in the previous session, as investors awaited the US consumer price index report, which could cement expectations of a Federal Reserve rate hike next week.
Data released on Thursday showed that US producer prices accelerated in August, as the war involving Iran pushed wholesale energy costs higher. In response, markets are now pricing in about a 71% chance of a 25-basis-point Fed rate increase next week, up from 61% before the PPI figures were published.
Gold also came under pressure from surging oil prices amid the escalating US–Iran conflict, intensifying worries about rising inflation. At the same time, US Treasury yields climbed after the Treasury Department’s first expanded buyback operation drew weaker-than-expected demand. Rising yields tend to weigh on non-interest-bearing assets such as gold.
With these headwinds, gold is on track to fall more than 2% this week, heading for its third consecutive weekly decline.