As market players concentrated on the US Federal Reserve’s future policy trajectory, gold slightly increased on Friday, October 16, as a weaker US dollar provided support. Spot gold increased by 0.3 percent to US$4,184.34 per ounce by 8:24 AM, although it has declined by 0.2 percent for the week to date. US gold futures for December delivery increased by 0.9 percent, reaching a price of US$4,205.70 per ounce. The US dollar is poised to experience its initial weekly decline in five weeks, resulting in a decrease in the cost of gold for those holding alternative currencies.

Federal Reserve chair Kevin Warsh expressed a positive outlook regarding the robustness of the US economy, yet refrained from indicating whether additional interest-rate increases are necessary or the timing of such actions. “Fed chair Warsh offered nothing new on policy at his (International Monetary Fund) speech, leaving market pricing for an October hold intact and creating room for a further gold rebound in the near-term,” said Nikos Tzabouras. Traders predominantly anticipate that the US central bank will maintain its current interest rates in October, while assigning a 91 percent probability to a potential rate increase in December, according to the CME’s FedWatch Tool.

Data released on Thursday indicated that US producer prices rose by the largest margin in 4½ years during September, signalling a notable expansion of inflation beyond just energy products. The data followed Wednesday’s consumer price report, which indicated that prices accelerated in September. Gold is often regarded as a safeguard against inflation; however, elevated interest rates generally diminish the attractiveness of this non-yielding metal.

“A retreat in yields and the US dollar would pave the way for gold to resume its rise above $5,000 per ounce in 2027,” analysts said in a note. Among other metals, spot silver increased by 0.5 percent to US$57.75 per ounce, platinum experienced a rise of 0.9 percent to US$1,639.46, and palladium also saw an uptick of 0.9 percent to US$1,136.17. However, all three metals are on track to record weekly losses.