Spot gold rose to $3,915.31 per ounce by 03:22 GMT on Friday, up about 1% on the session, after bouncing from a 13-month low recorded in the previous session. Despite the short-term uptick, bullion was on track for a weekly decline of roughly 3.5% as markets weigh stronger inflation data, a firmer dollar and climbing Treasury yields.
U.S. futures for December delivery strengthened in step with spot bullion, with the contract quoted at $3,919.60, a rise of 0.9%. Another U.S. futures quote was recorded at $3,890.67, up 0.1% from its previous level. Other precious metals moved modestly higher: silver ticked up to $50.0785 an ounce, platinum gained 0.2% to $1,524.00, and spot palladium advanced 0.3% to $1,001.40, while palladium futures were up 0.5% at $997.00. The U.S. Dollar Index remained largely unchanged at 103.21.
Market participants have been selling gold aggressively since Tuesday, a reaction tied directly to stronger-than-expected U.S. consumer inflation figures and a string of hawkish comments from Federal Reserve officials. Those developments prompted investors to re-evaluate the expected path for U.S. interest rates and to price in more aggressive monetary tightening.
Treasury yields extended their advance on Thursday, with some maturities rising by more than 12 basis points. The moves were concentrated in shorter-dated securities, which typically react most sensitively to shifting expectations for near-term monetary policy.
Fed commentary reinforced the hawkish tenor. Chicago Fed President Austan Goolsbee said the central bank needed to ensure inflation was contained before economic activity ran too hot. San Francisco Fed President Mary Daly suggested additional rate increases would probably be necessary, noting that inflation remained elevated beyond sectors directly exposed to tariffs and oil prices. These public remarks added to market conviction that rates will stay higher for longer.
Markets have moved to fully price in a quarter-point federal funds rate increase in December, and some investors are considering the possibility of a half-point move. In certain cases, bets on further tightening have been pushed out beyond the December meeting.
Energy-price dynamics have also fed into the inflation narrative and market positioning. Brent crude approached $96 a barrel on Thursday after U.S. President Donald Trump downplayed prospects for a diplomatic breakthrough with Iran and said Washington did not need an agreement with Tehran, adding that military action remained an option. The firming in oil has bolstered concerns about higher inflation, reinforcing expectations for additional Fed tightening.
Analysts at ANZ pointed to the interaction of several factors in explaining gold’s slide below $3,900: rising energy costs, stronger economic data, higher bond yields and a dollar trading above 103. In commentary highlighting the potential for a more forceful tightening cycle, ANZ analysts warned that "the Fed could even go for 50bp rate hikes in December" should economic resilience continue to make the case for more aggressive policy moves.
For now, the combination of higher yields, a resilient dollar and energy-driven inflation pressures is weighing on investment demand for gold even as the metal attempts intermittent recoveries. Traders and portfolio managers will be watching incoming data and Fed commentary closely for further clues on the likely magnitude and timing of future rate increases.