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Gold edged 0.4% lower for the week to around US$4,175 an ounce, as a run of stronger-than-expected US inflation data reinforced expectations of further rate rises. Silver and platinum also finished lower.
US consumer prices accelerated in September, with annual inflation reaching 3.7%, and producer prices also came in hot. Chicago Fed President Austan Goolsbee called the figures “discouraging”, while Cleveland Fed President Beth Hammack warned the Fed might need to move more aggressively if public inflation expectations deteriorate.
Markets now see little chance of a hike at the Fed's late-October meeting, but price around a 90% probability of an increase in December. Fed Chair Kevin Warsh acknowledged the strength of the US economy but offered no guidance on the rate path, leaving traders uncertain.
TD Securities' Bart Melek summed up the mood: “We're very much rangebound and tilting toward the lower bound of support.” Capital Economics expects gold to drift lower through year-end as the Fed keeps tightening.
There was a bright spot in physical demand. Gold traded at a premium in India for the first time in more than three months, as the recent pullback in prices encouraged jewellery buying.
The week ahead: the gap between hawkish central bank messaging and solid physical buying at lower prices remains the key tension to watch.
Sources: CNBC / Reuters · TMGM