Gold futures fell Friday, with prices on track for their first weekly loss in three weeks, as a 75 basis point interest rate rise by the Federal Reserve next month looked to be locked in the wake of higher than expected U.S. consumer price inflation in September in data published Thursday.
Price action
- Gold for December delivery GC00, -1.39% GCZ22, -1.39% fell $20.50, or 1.2%, to $1,656.50 an ounce on Comex, on track for a weekly decline of 3.1%.
- December silver SIZ22, -2.90% was down 44.8 cents, or 2.4%, at $18.47 an ounce, heading for an 8.8% decline.
- December palladium PAZ22, -3.08% dropped 2.1% to $2,073 an ounce, while January platinum PLF23, +0.22% rose 0.6% to $901.50 an ounce.
- December copper HGZ22, -0.64% traded at $3.44 a pound, down a fraction of a cent.
Market drivers
Gold and silver “continue to trade in a strong inverse relationship with the powerful U.S. dollar index,” said Jim Wyckoff, senior analyst at Kitco.com, in a daily commentary. And gold and silver bulls “remain perplexed by their metals’ inability to catch a safe-haven bid amid heightened geopolitical and marketplace uncertainties.”
In Friday dealings the ICE U.S. Dollar index DXY, +0.65% was up 0.8% at 113.25, trading up 0.4% for the week.
Gold ended lower on Thursday but off session lows in a whipsaw session that saw U.S. stocks snap back from sharp losses in volatile activity across financial markets after the September consumer-price index came in hotter than expected, cementing expectations for a 75 basis point rise in the fed-funds rate in early November. Investors also penciled in a higher peak for interest rates as the Fed battles stubborn inflation.
See: Why stocks scored a historic bounce after another hot inflation report
“The inflation data was terrible for the yellow metal as it cemented a 75 basis point hike from the Fed next month. Not just that, with inflation seemingly so stubborn, it may need to go further than markets previously anticipated,” said Craig Erlam, senior market analyst at Oanda, in a note.
“That doesn’t bode well for gold in the near term. Yesterday’s lows around $1,640 could soon be tested once more, with the late-September lows the next test after that,” he said.
On Friday, data showed U.S. retail sales fell flat in September. The University of Michigan survey revealed that consumer sentiment edged up to 59.8 in October from 58.6 in the previous month, while consumer expectations for inflation over the next year rose to 5.1% from September’s one-year low of 4.7%.