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Gold Prices Rise on Speculation of Inaction by Federal Reserve


Gold prices continued to climb on Friday, rebounding from a three-week low earlier in the week. A batch of inflation reports led to speculation that they weren’t alarming enough to prompt immediate action from the Federal Reserve. This caused an increase in demand for the precious metal.

Price Action

  • Gold futures for December delivery saw a gain of $8.30, or 0.4%, reaching $1,941 per ounce.
  • Silver futures for December experienced a gain of 46 cents, or 2%, reaching $23.46 per ounce.
  • Platinum futures for October gained $14.50, or 1.6%, reaching $925 per ounce.
  • Palladium futures for December rose by $19.70, or 1.6%, reaching $1,274 per ounce.
  • Copper futures for December were slightly down by 0.1%, at $3.817 per pound.

Market Drivers

Gold is projected to end the week around its starting point as recent data on consumer and producer prices suggest that inflation is slowly increasing. However, the margin by which it increased did not raise alarm bells in the markets or among central bankers.

Additionally, in Europe, the European Central Bank (ECB) has indicated that they have likely completed their interest rate hikes. After raising its deposit rate by another 25 basis points on Thursday, the ECB now stands at a deposit rate of 4%.

The strength of the U.S. dollar, which had reached a six-month high, paused on Friday. This pause in dollar strength also contributed to the rise in gold prices.

According to Rupert Rowling, a market analyst at Kinesis Money, “The slight buoyancy of gold on Friday has also been assisted by a slight weakening in the strength of the US dollar, the currency which gold has an inversely correlated relationship with as the metal is typically priced in dollars.”

The ICE U.S. Dollar Index (DXY), which measures the strength of the dollar against a basket of rivals, was down by 0.1% at 105.31.

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