Gold Holds Decline on Stronger Dollar, Yields

Gold traded largely unchanged near $3,880 an ounce on Friday, hovering around levels last seen in September 2025, as a stronger US dollar and rising Treasury yields reflected growing expectations of more aggressive Federal Reserve monetary tightening. Meanwhile, rising oil prices amid fading hopes for peace in the Middle East added to inflation concerns. Data this week showed US consumer prices rose 0.4% in October, slightly above market expectations. Producer price inflation, meanwhile, eased more than anticipated to 0.3%, although September's reading was revised higher. Markets are currently pricing in an 89% probability of a 25-basis-point Fed rate hike in December, while the likelihood of a larger 50-basis-point increase stands at 11%. Adding to the hawkish outlook, New York Fed President John Williams said on Thursday that further rate increases were likely as the central bank continues its efforts to bring elevated inflation under control in an otherwise resilient economy.

Gold prices recovered above $3,900 per ounce on Friday after declining for three consecutive sessions, but remained on track for a sharp weekly loss as a stronger US dollar and rising Treasury yields reflected growing expectations of more aggressive Federal Reserve rate hikes. The shift in market sentiment followed hotter-than-expected US consumer inflation data and hawkish comments from Fed officials, with some policymakers suggesting that a larger 50-basis-point rate increase may be necessary to contain inflation. Markets are currently pricing in around an 85% probability of a 25 bps rate hike in December, as well as a 15% chance of a larger 50 bps increase. Traders are also increasingly anticipating additional rate hikes next year. Meanwhile, gold faced further downward pressure from recovering oil prices after President Donald Trump stated that the US no longer needs a deal with Iran.

Gold prices dropped more than 2.5% to around $3,870 an ounce on Thursday, retreating to levels not seen in months, pressured by a stronger US dollar, expectations of further monetary tightening by the Federal Reserve and rising oil prices. Stronger-than-expected US consumer inflation data for October, released on Tuesday, boosted the dollar to a 19-month high as traders increased bets on further Fed rate hikes. Meanwhile, renewed oil price gains added to inflation concerns after President Donald Trump said the US did not need a deal with Iran and redirected Vice President JD Vance towards domestic priorities, away from negotiations with Tehran. According to CME’s FedWatch Tool, markets are pricing in nearly a 90% chance of a 25-basis-point rate hike in December, while the probability of a larger 50-basis-point increase has risen to around 10%, from zero before the inflation data.