Reuters – Gold prices rose on Friday as the dollar retreated, but the precious metal remains on track for a modest weekly loss as investors assess comments from Federal Reserve (the U.S. central bank) officials regarding interest rates.
Spot gold increased 0.2 percent to $4,177.82 per ounce by 04:33 GMT, though it has lost 0.5 percent since the beginning of the week. U.S. gold futures for December delivery rose 0.7 percent to $4,199.10 per ounce.
Kelvin Wong, senior market analyst at OANDA, said, "Gold has remained confined within a price range capped at $4,221, while touching the lower bound of the range at $4,075 earlier in the week."
He added, "Inflation trends remain high, as the core Consumer Price Index and core Producer Price Index data for September came in higher than expectations."
The dollar is heading for its first weekly loss in five weeks, making gold denominated in the U.S. currency less expensive for holders of other currencies.
Data showed that U.S. producer prices recorded their largest increase in four and a half years last month, driven by rising costs of goods and services, in the latest sign that inflationary pressures are broadening beyond energy-related products.
This followed Wednesday's consumer price report, which showed inflation accelerating in September due to rising gasoline costs.
According to CME Group's FedWatch Tool, traders are pricing in a 28 percent probability of an interest rate hike later this month, and an 89 percent probability of a hike in December.
Chicago Federal Reserve Bank President Austan Goolsbee said that this week's stronger-than-expected inflation data was "disappointing." Meanwhile, Cleveland Federal Reserve Bank President Beth Hammack said the U.S. central bank may have to raise interest rates at a more aggressive pace if there is a marked deterioration in the public's inflation expectations.
Although gold is considered a hedge against inflation, higher interest rates diminish the appeal of the non-yielding metal.
In India, several major mutual funds issued public announcements late Thursday stating the suspension of large subscriptions in gold-backed exchange-traded funds, ahead of a festive season that typically sees a surge in investment demand.
As for other precious metals, spot silver rose 0.7 percent to $57.81 per ounce, platinum climbed 1.1 percent to $1,642.75, while palladium increased 1.5 percent to $1,143.46. However, all three metals are heading for weekly losses.
