Gold Prices Rise as Fed Hike Odds Fall

Spot gold prices rose Friday, settling at $4,088.39, up $61.47 or 1.53%. August Comex gold futures also gained, closing at $4,096.30, a rise of $48.70 or 1.20%. This marked the best session in weeks, but gold still lost roughly 2.1% for the week, its fourth consecutive weekly decline.

The rally came as the U.S. dollar weakened and crude oil prices fell, easing inflation concerns. This led to a drop in the probability of a September interest rate hike, from 64% to 59%. The May PCE Price Index, a key inflation measure, met expectations at 4.1% year-over-year, which helped stop gold’s recent selling pressure.

Physical gold demand from India offered some support, with gold trading at a premium there for the first time in six weeks. China’s demand, however, remained subdued. Despite Friday’s gains, gold remains in a downtrend, having fallen 30% from its January high of $5,602.23.

The U.S. dollar remains a key factor for gold prices. Any renewed dollar strength could pressure gold again. The Federal Reserve’s restrictive policy stance has not changed, and the market has not fully adjusted to the outlook for higher rates. Gold’s long-term trend change depends on an end to the rate hike discussion.