Gold prices saw a modest rise on Friday, benefiting from a slight pullback in the U.S. dollar and bond yields. Investors were digesting the still hawkish stance presented by the Federal Reserve.
Spot gold inched up by 0.3% to reach $1,925.21 per ounce by 1:59 p.m. EDT (1759 GMT). This gain followed three consecutive sessions of losses. Meanwhile, U.S. gold futures settled 0.3% higher, closing at $1,945.60 per ounce.
The U.S. dollar retreated from its six-month peak against a basket of major currencies. This depreciation of the dollar made gold more attractive to investors using other currencies. Additionally, benchmark 10-year Treasury yields decreased slightly after reaching 16-year highs. [USD/] [US/]
David Meger, the director of metals trading at High Ridge Futures, commented on the situation, stating, “The main focal point is the idea that the Fed will keep rates higher for longer, and that has driven the dollar and yields higher and has applied pressure to not just gold, but commodity markets across the board.”
Although the U.S. central bank decided to keep interest rates steady this week, they left the door open for a potential 25-basis point rate hike before the end of the year, as indicated in the Fed’s updated quarterly projections.
Traditionally, gold, which does not yield interest, tends to lose favor among investors when interest rates rise.
Looking ahead, Craig Erlam, senior markets analyst at OANDA, emphasized the significance of economic data in the coming weeks. He noted, “There is going to be a huge amount of emphasis now on the economic data, which is going to be a massive driver in the run-up to the next central bank meetings.”
A survey published on Friday revealed that U.S. business activity remained relatively unchanged in September, with the services sector operating at its slowest pace since February.
Minneapolis Federal Reserve President Neel Kashkari commented on U.S. consumer spending, stating that it continues to exceed expectations despite the central bank’s firm stance on interest rate increases.
In the precious metals market, silver recorded a 0.7% gain, reaching $23.54 per ounce, marking its highest level since September 5. Platinum also climbed, rising by 0.8% to $926.45, while palladium experienced a 1% decline, settling at $1,250.78.
