Precious Metals After Hours: Inflation Data Fuels Fed Pause Expectations, Gold Closes Higher on Weekly Basis

Gold prices rose on Friday (14th), closing the week higher, as U.S. inflation data came in line with expectations, supporting expectations that the Federal Reserve (Fed) will maintain interest rates unchanged next month. The U.S. dollar weakened in response, benefiting dollar-denominated gold.

Spot gold rose 0.7%, reaching $4,379.95 per ounce. On Thursday, it briefly touched $4,449.39, the highest level since June 5.

December-delivery gold futures rose 0.4%, closing at $4,437.30 per ounce.

Gold gained 0.9% for the week.

Jim Wyckoff, market analyst at American Gold Exchange, said, "The decline in the dollar index is a favorable external market factor supporting gold prices today."

The dollar index fell 0.3%, making dollar-denominated gold cheaper for overseas buyers.

U.S. nonfarm payrolls in July unexpectedly declined, and this week's inflation data broadly met market expectations, both of which supported gold prices. This has significantly reduced market expectations of a Fed rate hike next month. Most analysts now expect the Fed to maintain its current interest rate range of 3.50-3.75% unchanged.

The CME FedWatch Tool shows that the market currently prices in a 33% chance of a Fed rate hike in September, down from 55% last week.

Commerzbank stated, "Since we expect the Fed not to hike rates, gold still has room for further gains." Lower interest rates are generally favorable for non-yielding gold.

Meanwhile, shipping through the Strait of Hormuz appears to have nearly stalled, with reports of two more vessels being attacked. The U.S. indicated it might indefinitely maintain its maritime blockade on Iran. Oil prices rose on the week due to this news.

Wyckoff said, "If oil prices continue to rise, this will become a negative factor for the metals market, as higher oil prices will push up inflation and prompt central banks to raise rates."

Gold discounts in the Indian market widened to the highest level in over two months.

Other precious metals trading:

Spot silver rose 0.7%, reaching $64.88 per ounce, closing the week higher.

Spot platinum rose 1.8%, reaching $1,746.97 per ounce, closing the week higher.

Spot palladium rose 1.1%, reaching $1,320.93 per ounce, but closed the week lower.