Gold Faces Weekly Loss as Fed Rate-Hike Bets and Treasury Yields Weigh

Gold prices inched up on Friday but remained on course for a weekly decline as investors weighed persistent inflation risks, firmer U.S. Treasury yields and expectations that the Federal Reserve may continue tightening monetary policy. Spot gold rose 0.1% to $4,282.98 an ounce by 2:05 p.m. ET, though it was still down about 2.1% for the week. U.S. gold futures ended 0.5% higher at $4,321.20. The modest daily gain did little to offset broader pressure on bullion, which has been losing ground as yield-bearing assets become more attractive and the dollar-rate outlook remains a key driver of market sentiment.

Yields Raise the Cost of Holding Gold

The benchmark 10-year U.S. Treasury yield climbed to a new 19-year high, adding pressure to gold because the metal pays no interest. Higher bond returns can reduce demand for bullion, especially when investors expect central banks to keep policy tight.

Market analyst Han Tan of Bybit said the sharp rise in Treasury yields has pushed gold toward another weekly setback, with the metal now facing its fourth weekly fall in five weeks.

Fed Outlook Stays in Focus

The Federal Reserve lifted interest rates by a quarter percentage point last week, its first increase in three years, and indicated that further hikes may follow. Traders now see a 66% probability of another increase in October and a 93% chance of a December move, according to CME FedWatch data.

Although gold is often viewed as a hedge against inflation and geopolitical risk, higher rates tend to weaken its appeal. Bullion is now roughly 19% below its February 27 session peak.

Energy Prices and Geopolitics Add Complexity

Inflation concerns have been reinforced by higher energy prices since the start of the U.S.-Israeli war on Iran, encouraging central banks to maintain a restrictive stance. However, oil prices fell about 3% as negotiators in New York explored a phased plan that could include Iran reopening the Strait of Hormuz and the United States easing economic restrictions.

Other Precious Metals Also Set to Fall

Silver rose 0.5% to $64.26 an ounce, while platinum gained 1.7% to $1,780.28. Palladium slipped 0.3% to $1,270.30. Despite Friday’s mixed moves, all three metals were still headed for weekly losses.