FX.co ★ Gold Heads for Third Weekly Loss as Fed Hike Bets Rise

Gold climbed to about $4,350 an ounce on Friday but remained on course for a weekly loss of nearly 2%, its third consecutive weekly decline, as investors assessed the latest US inflation figures ahead of next week’s Federal Reserve meeting.

US headline inflation held at 3.4% in August, matching market expectations, while the monthly CPI rose 0.4%, the largest increase in three months. Core CPI accelerated to 0.3% month-on-month, its fastest pace since April and above the 0.2% consensus forecast, though the annual core rate eased to 2.4%, its lowest level since March 2021.

US producer prices also picked up in August as the war involving Iran drove wholesale energy costs higher, while labor market data released last week signaled ongoing strength in employment. In response, markets have increased their expectations of a 25-basis-point interest rate hike by the Fed next week, with the CME FedWatch Tool now assigning roughly a 90% probability, up from about 70% prior to the inflation release.