Gold rallies early Friday after the dollar weakened, but the yellow metal heads for a weekly drop on the likelihood of addition interest rate increases by the Federal Reserve.
Key U.S. inflation reports this week showed that the cost of goods are rising faster than economists had estimated, setting the stage for potential rate additional interest increases before the end of the year—though investors overwhelmingly don’t anticipate a rate hike at the next policy meeting at the end of this month.
December gold futures rose 1.5% Thursday to settle at $4,170.10 an ounce on Comex, though the front-month contract lost 1.1% in the first four days of the week. Bullion dropped 6.6% last month after rising 9.1% in August and gaining 1.7% in July. It is down 3.9% so far this year after rallying 64% in 2025. The December contract is currently up $35.90 (+0.86%) an ounce to $4206.00 and the DG spot price is $4184.60.
The dollar headed for its first weekly drop in five weeks, making dollar-denominated gold a more attractive investment for holders of other currencies.
The consumer price index for September came in hot on Wednesday, showing a 3.7% increase from a year earlier and an acceleration in inflation form a month earlier. Much of the increase came from higher fuel prices, though other categories also showed increases. The producer price index on Thursday showed faster gains than expected, with the data showing the biggest increase in 4.5 years. The report showed that inflationary pressures are extending beyond energy prices.
The Fed closely watches inflation and the labor market when setting interest rates. The central bank is overwhelmingly expected to keep interest rates at 3.75% to 4.00% later this month. These bets have supported bullion, which comes under pressure when rates go up.
More than 82% of the investors tracked by the CME FedWatch Tool are now betting that the Fed will keep interest rates unchanged in October, with the rest anticipating a 25 basis point rate increase. The next Fed policy meeting is Oct. 28, six days before the U.S. midterm elections. The higher price of goods is being seen as a pivotal issue in the election. The only remaining subsequent meeting this year is Dec. 9.
The Fed raised its benchmark rate by 25 basis points last month. It had previously kept rates unchanged this year after three previous rate cuts.
Inflation has climbed since the start of the war with Iran in late February.
December silver futures increased 2.3% Thursday to settle at $57.16 an ounce on Comex, though the front-month slid 6.4% in the first four days of the week. The most-active contract touched a record above $115 in January. Silver tumbled 9.6% in September after climbing 16% in August and sliding 3.6% in July. It is down 19% so far this year after rising 141% in 2025. The December contract is currently up $0.669 (+1.17%) an ounce to $57.825 and the DG spot price is $57.71.
Spot palladium gained 3% Thursday to $1,135.50 an ounce and declined 1.6% in the first four days of the week. Palladium lost 11% last month after rallying 5.7% in August and adding 5.8% in July. It’s down 30% in 2026 after rising 74% last year. The current DG spot price is up $2.50 an ounce to $1137.00.
Spot platinum gained 0.5% Thursday to $1,621.20 an ounce and is down 4% so far this week. Platinum fell 4.6% last month after increasing 7.5% in August and gaining 6.6% in July. Platinum is down 20% so far this year after increasing 122% in 2025. The DG spot price is currently up $33.90 to $1651.40.
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