Gold prices edged lower on Friday and were heading toward a fourth consecutive weekly decline.
A stronger U.S. dollar and rising expectations of Federal Reserve interest-rate hikes continued to reduce demand for the precious metal.
Gold Prices Extend Weekly Decline
Spot gold fell 0.2% to $4,020.88 per ounce by 02:26 ET, or 06:26 GMT.
U.S. gold futures also declined, falling 0.3% to $4,037.30 per ounce.
Gold was on track to lose nearly 3% for the week. The precious metal has also fallen by approximately 11% during the month.
Strong U.S. Dollar Pressures Gold
The U.S. dollar remained close to a 13-month high and was heading for its second consecutive weekly gain.
A stronger dollar makes gold more expensive for buyers using other currencies. This often reduces international demand for bullion.
The dollar has received support from growing expectations that the Federal Reserve may need to tighten monetary policy further.
U.S. Inflation Strengthens Fed Rate-Hike Bets
U.S. inflation data released on Thursday increased concerns that interest rates could rise again.
The personal consumption expenditures price index increased by 4.1% year-on-year in May.
The PCE index is the Federal Reserve’s preferred measure of inflation. The latest figure was its highest in more than three years and the first reading above 4% since 2023.
Persistent inflation could encourage the Federal Reserve to keep interest rates high or introduce additional increases.
Markets Price In Possible September Rate Increase
According to the CME FedWatch tool, markets see a 63% probability of a Federal Reserve interest-rate increase by September.
Higher interest rates usually weaken demand for gold because the metal does not pay interest or provide a regular yield.
When bond yields and savings rates rise, investors may prefer income-generating assets over precious metals.
Middle East Tensions Limit Gold Losses
Geopolitical uncertainty provided some support for gold and helped limit the decline.
Investors continued to monitor developments in the Middle East after a cargo vessel reported an attack near the Strait of Hormuz.
The incident highlighted continuing security risks despite a preliminary peace agreement between the United States and Iran.
Reports of the attack briefly increased safe-haven demand for gold. However, the effect was not strong enough to overcome pressure from the dollar and higher interest-rate expectations.
Silver Heads for Steep Weekly Drop
Silver prices fell 1.1% to $57.31 per ounce.
The metal was heading toward a weekly decline of approximately 12%, reflecting broad weakness across precious metals.
Silver can benefit from safe-haven demand, but it is also sensitive to expectations surrounding industrial activity and global economic growth.
Platinum Faces Seventh Weekly Loss
Platinum slipped 0.2% to $1,600.23 per ounce.
The metal was on track to record its seventh consecutive weekly decline.
Weak investor sentiment and pressure from higher interest rates continued to weigh on platinum prices.
Copper Prices Also Move Lower
Copper prices declined on both the London and U.S. markets.
Benchmark copper futures on the London Metal Exchange fell 0.9% to $13,182.33 per tonne.
U.S. copper futures also dropped 0.9% to $69.01 per pound.
The decline suggested that pressure extended beyond precious metals as investors assessed interest-rate expectations and the wider global economic outlook.
Gold Outlook Depends on Dollar and Fed Policy
Gold’s near-term direction will likely depend on future U.S. inflation data, Federal Reserve signals and movements in the dollar.
Further increases in rate-hike expectations could keep gold under pressure.
However, renewed geopolitical instability or weaker economic data may revive safe-haven demand and provide support for bullion.
