Gold Prices Increase as Investors Eye US Interest Rates

Gold prices ticked higher on Friday as investors weighed inflation fears and the potential direction of US interest rates.

Spot gold gained 0.3% to $4,147.77 an ounce after hitting a two-month low on Wednesday. December U.S. gold futures climbed 0.4% to $4,172.70 an ounce.

Investors are looking to the US Federal Reserve for clues on how officials plan to bring inflation back down to their 2% target. Another hike in interest rates may be necessary, Alberto Musalem, president of the Federal Reserve Bank of St. Louis, said, but he did not say what should be decided at the next policy meeting.

Market expectations are still mixed. Traders were pricing in an 18% likelihood of a US rate hike in October and an 81% chance in December, according to the CME FedWatch tool.

Often, gold is viewed as a safeguard for wealth in times of inflation and economic turmoil. Higher interest rates can make gold less attractive since it doesn’t pay interest.

Other precious metals also climbed on Friday. Silver jumped 0.5% to $59.62 an ounce, platinum gained 1.4% to $1,656.30 and palladium surged 1.1% to $1,135.25. These daily advances were insufficient to prevent all three metals from posting weeklong losses.