FX.co ★ Gold Set for Weekly Drop

Gold prices climbed back above $3,900 per ounce on Friday after three straight sessions of declines, but remained headed for a steep weekly loss as a stronger US dollar and rising Treasury yields reinforced expectations of more aggressive Federal Reserve tightening. The shift in sentiment followed hotter-than-expected US consumer inflation data and hawkish remarks from Fed officials, with some policymakers indicating that a larger 50-basis-point rate increase may be required to rein in inflation.

Futures markets are now assigning roughly an 85% probability to a 25-basis-point rate hike in December and about a 15% chance of a larger 50-basis-point move, while traders increasingly expect further rate increases in the coming year. At the same time, gold came under additional pressure from a rebound in oil prices after President Donald Trump declared that the United States no longer needs a deal with Iran.