Gold heads for sharpest weekly decline in four months on Fed rate outlook

Gold prices eased on Friday and were set for their sharpest weekly decline in more than four months as surging oil prices and resilient US economic data fuelled expectations that the Federal Reserve would keep interest rates higher for longer.

Fundamentals

Spot gold was down 0.1% at $4,018.69 per ounce by 0036 GMT, touching its lowest level since August 3. The metal fell 3.4% for the week so far, recording its biggest weekly decline since June.

US gold futures for December delivery dropped 0.6% to $4,033.70.


Oil prices rose about 4% to a five-month high on Thursday after Houthi attacks in Saudi Arabia stoked concerns of further disruption to energy supplies.

Elevated energy prices bolster expectations of higher-for-longer interest rates by the Fed, increasing the opportunity cost of holding non-yielding bullion.

The number of Americans filing new claims for unemployment benefits dropped to near 57-year lows last week, suggesting a modest pickup in job growth in October.

Focus has turned to the Fed's October 27-28 policy meeting and next week's Personal Consumption Expenditures (PCE) data, a key gauge closely watched by the central bank as it targets a 2% inflation rate.

Traders are pricing in as low as a 7% chance of an interest rate hike next week, but expectations for a hike in December remain at 81%.

India has issued permits to import around 6,500 metric tons of silver over the next six months as the world's biggest consumer of the precious metal seeks to meet festive-season demand, four bullion dealers who received the permits told Reuters.

HSBC cut its average 2026 platinum and palladium price forecasts in a research note on Thursday, citing shifting market fundamentals and investor liquidation, while adding that both metals have room to recover.

Among other metals, spot silver edged 0.1% lower to $54.46 per ounce, platinum slid 0.4% to $1,563.67 and palladium dropped 0.5% to $1,051.00. All three metals headed for weekly declines.

Data/Events (Gmt)

0030 Japan CPI, Core Nationwide YY, September

0030 Japan CPI, Overall Nationwide, September

0030 Japan S&P Global Mfg PMI, Comp Op, SVC PMI Flash SA, October

0500 Japan Chain Store Sales YY, September

0600 UK Retail Sales MM, Ex-Fuel MM, YY, September

0715 France S&P MFG, Services, Composite Flash PMI, October

0730 Germany S&P MFG Services, Composite Flash PMI, October

0800 EU S&P MFG, Services, Composite Flash PMI, October

0830 UK Flash Composite, Manufacturing, Services PMI October

1345 US S&P Global Mfg, Svcs, Comp PMI Flash, October

1400 US U Mich Sentiment Final, October