Gold Climbs Back to $4,350 Despite Looming Third Consecutive Weekly Decline

Key Highlights

• The precious metal climbed 0.8% to approximately $4,351 following Thursday’s nearly 2% decline
• Traders are pricing in approximately 70% odds of a Federal Reserve interest rate increase next week
• August producer price data showed a 0.4% uptick, intensifying inflation worries
• Physically backed gold ETFs recorded $18 billion in net purchases during August, marking the second-highest monthly figure ever
• Red metal retreated after reaching an unprecedented peak above $14,800 per metric ton

The yellow metal staged a recovery Friday following Thursday’s steep selloff, though it remains poised to register a third consecutive weekly decline as persistent inflation readings and mounting interest rate expectations weigh on sentiment.

Spot prices for the precious metal advanced 0.8% to reach $4,351.28 per ounce during morning trade. Meanwhile, futures contracts declined 0.4% to settle at $4,391.37. The white metal advanced 0.8% to $64.10 per ounce, while the platinum market climbed 1.1% to $1,801.18.

The yellow metal is tracking toward a weekly decline exceeding 2%. Contributing factors include surging crude prices, elevated Treasury yields, and increasing market conviction that the central bank will implement a rate adjustment at next week’s policy gathering.

August wholesale inflation figures showed a 0.4% monthly advance, aligning with analyst forecasts and representing the most robust gain since May. These numbers reinforced concerns that elevated energy expenses are fueling broader price pressures.

According to CME FedWatch indicators, market participants now assign roughly 70% probability to a central bank rate increase this week.

Escalating Regional Tensions Lift Crude Prices

Energy markets are playing a central role in the current inflation narrative. International benchmark crude approached $108 per barrel as diplomatic and military friction between Washington and Tehran continues to intensify.

Hostilities have accelerated in recent weeks. American forces have targeted Iranian oil vessels, Tehran has fired projectiles at a Jordanian military installation, and Yemeni Houthi militias have conducted strikes against Saudi energy infrastructure.

Ongoing interruptions to global petroleum flows could maintain upward pressure on inflation, strengthening the case for the Federal Reserve to sustain a hawkish monetary stance.

Market attention now shifts to Friday’s consumer inflation report. Forecasters anticipate headline consumer prices will advance 0.4% month-over-month and 3.4% annually for August. Core readings are projected to increase 0.2% from the previous month.

Exchange-Traded Funds Reach Historic Accumulation Levels

Notwithstanding near-term price headwinds, investment appetite for the precious metal remains robust. According to World Gold Council data, globally listed physically backed ETFs attracted $18 billion during August, representing the second-largest monthly accumulation ever recorded.

Total holdings expanded by 121 tonnes to an unprecedented 4,189 tonnes. Combined assets under management surged 16% to reach $615 billion.

This institutional buying helped propel the metal to a 13% monthly gain in August, ranking as the third-strongest monthly performance over the past quarter-century.

Nevertheless, market observers indicate the precious metal must recapture its 200-day moving average positioned near $4,537 to confirm the correction has concluded. Absent that technical recovery, some strategists project potential downside toward the $4,200 level.

The red metal also experienced significant volatility this week. Three-month contracts on the London Metal Exchange touched a record exceeding $14,800 per metric ton before reversing course. Contracts most recently traded 0.3% higher at $14,233 per ton.

Strategists at Sucden Financial noted that speculation regarding potential reversal of American trade tariffs prompted rapid unwinding of speculative copper positions, though constrained supply fundamentals should prevent substantial further declines.

The post Gold Climbs Back to $4,350 Despite Looming Third Consecutive Weekly Decline appeared first on Blockonomi.