Gold prices edged higher on Friday, but the precious metal remains on track for its largest weekly decline in nearly six weeks as rising oil prices and renewed inflation concerns continue to weigh on investor sentiment.
Spot gold gained 0.5% to $3,988.20 per ounce, recovering from earlier losses after touching its lowest level since July 1. Meanwhile, U.S. gold futures for August delivery settled at $3,992 per ounce.
Despite Friday’s rebound, gold has fallen approximately 3.2% since the start of the week, marking its biggest weekly loss since early June.
The decline comes as investors become increasingly concerned that higher oil prices could fuel inflation and force the Federal Reserve to maintain a tighter monetary policy stance for longer. These concerns have overshadowed the positive impact of recent U.S. inflation data, which showed price pressures easing more than expected.
Market expectations for future interest rates have shifted noticeably. According to current estimates, there is now roughly a 73% probability that the Federal Reserve could raise interest rates by December.
Higher interest rates are generally viewed as negative for gold because the metal does not generate income or yield. When interest-bearing assets offer higher returns, investors often move money away from non-yielding assets such as gold.
The recent surge in oil prices has also contributed to concerns that inflation could reaccelerate in the coming months, potentially complicating the Federal Reserve’s efforts to bring inflation back to its long-term target.
Other precious metals also faced pressure during Friday’s session.
Silver fell 0.5% to $55.22 per ounce, while platinum declined 0.7% to $1,605.62 per ounce. Palladium also slipped 0.4% to $1,244.86 per ounce.
All three metals are heading toward weekly losses as investors reassess the outlook for interest rates, inflation, and global economic conditions.
For now, gold remains caught between two competing forces. On one hand, geopolitical uncertainty and economic risks typically support demand for safe-haven assets. On the other hand, rising oil prices and growing expectations of higher interest rates are creating headwinds that continue to pressure the precious metals market.
Investors will be closely watching upcoming economic data and Federal Reserve comments for further clues about the direction of inflation and monetary policy in the months ahead.
