Gold rises amid falling oil prices — Asharq Al-Awsat
Global gold prices rose on Friday amid weakening oil quotations, although the precious metal was still heading for a weekly decline. Investors were awaiting US consumer inflation data, which could affect expectations for the Federal Reserve's further monetary policy, Asharq Al-Awsat reports.
Gold and other metals performance
As of 11:05 GMT, the spot price of gold had increased by 0.6% to $4,339.46 per ounce. At the same time, it had fallen by nearly 3% since the beginning of the week. US gold futures lost 0.6% and traded at $4,381.30 per ounce.
Gold fell the previous day after the publication of the US producer price index. The data showed that prices rose in August in line with market expectations amid a recovery in the cost of energy commodities.
Ole Hansen, head of commodity strategy at Saxo Bank, said the metal was supported by weaker oil prices and hopes for the outcome of a meeting scheduled for Monday between ministers of the Gulf Cooperation Council countries and Iran regarding the passage of oil through the strait. According to him, buyers also became active near the important support level of around $4,300 per ounce.
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Expectations regarding the Fed rate
Oil prices were expected to end the week above $100 per barrel. Higher oil prices increase inflation risks and expectations of Federal Reserve interest rate hikes. Although gold is traditionally considered a hedge against inflation, higher rates reduce the appeal of an asset that does not generate interest income.
According to the CME FedWatch Tool, traders assessed the probability of a rate hike at the central bank's meeting next week at 67%, compared with 62% before the data were released. The US consumer price inflation report was due to be released at 12:30 GMT.
Demand for gold in India was subdued this week due to price volatility, while investment demand in China, the largest consumer of the metal, remained strong. Silver rose by 0.4% to $63.80 per ounce, platinum by 0.9% to $1,792.07, and palladium by 2.4% to $1,312.90. At the same time, all three metals were heading for a weekly decline.
