Gold retreated on Friday and appeared set to post a fourth straight weekly decline as a stronger U.S. dollar and rising expectations of additional Federal Reserve interest-rate increases put pressure on the metal.
Spot gold fell 0.7% to $3,998.74 an ounce by 23:52 ET (03:52 GMT). U.S. Gold Futures slipped 0.8% to $4,015.90. Over the week, bullion was heading for close to a 4% loss, and it has dropped roughly 12% so far this month.
Other precious metals moved lower alongside gold. Silver declined 2.5% to $56.44 per ounce and was tracking a roughly 13% weekly slump. Platinum fell 1.8% to $1,573.60 per ounce and was on course for its seventh consecutive weekly decline.
The U.S. dollar remained close to a 13-month high and was set for a second straight weekly gain, a dynamic that makes dollar-priced gold more costly for holders of other currencies and tends to damp safe-haven demand. The greenback’s strength has been underpinned by rising market expectations that the Fed may need to tighten policy further as inflation pressures persist.
Data released on Thursday showed the U.S. personal consumption expenditures (PCE) price index - the Federal Reserve's preferred inflation gauge - rose 4.1% in May from a year earlier. That reading was the highest in more than three years and was the first time the PCE index was above 4% since 2023.
Markets were assigning a 63% probability of a Fed rate increase by September, according to the CME FedWatch tool. Expectations of higher interest rates typically reduce demand for bullion because it does not pay interest or yield, making yield-bearing assets relatively more attractive.
Investors also watched developments in the Middle East after reports that a cargo vessel had been attacked near the Strait of Hormuz. The incident briefly revived safe-haven interest in gold but did not reverse the broader downward pressure from a firmer dollar and higher rate expectations, even amid reports of a preliminary U.S.-Iran peace agreement.
Market participants continued to weigh the interaction between currency moves, central bank policy outlooks and episodic geopolitical events. In the near term, bullion markets remain sensitive to further updates on U.S. inflation metrics, shifts in Fed hawkishness, and any escalation or de-escalation of geopolitical tensions that could spur safe-haven flows.