Gold slips for weekly loss as US inflation dents Fed rate cut bets

Gold prices are heading for a weekly decline as hotter-than-expected US inflation data reduced market confidence in a September interest rate cut by the Federal Reserve. As per Bloomberg, spot gold held steady at $3,336.45 an ounce in Friday morning trade in Singapore, putting it on track for a 1.8 per cent loss this week. The metal fell 0.6 per cent in the previous session after data showed US wholesale inflation in July accelerated at its fastest pace in three years. The surprise reading lifted US Treasury yields and strengthened the dollar — moves that typically weigh on non-yielding bullion, which is priced in the greenback.

Bloomberg data on swap market pricing shows traders now see around a 90 per cent chance of a Fed rate cut in September, compared with full certainty earlier this week. Gold usually benefits from lower interest rates, but the latest inflation surprise has tempered the outlook for rapid monetary easing.

Year-to-date gains still strong

Despite the weekly drop, bullion remains more than 25 per cent higher this year. Bloomberg notes that much of the rally came in the first four months of 2025, driven by heightened geopolitical and trade tensions that boosted safe-haven demand, along with robust central bank purchases.

Tariff confusion adds to volatility

Last week, uncertainty over whether gold bars would face US tariffs pushed the premium for New York futures over London spot prices sharply higher. President Donald Trump later said there would be no levy, helping narrow the gap. However, Bloomberg reports that formal clarification from authorities is still awaited.

Mixed moves in other precious metals

Silver was little changed on Friday, while platinum and palladium edged lower. The Bloomberg Dollar Spot Index was also steady, signalling muted currency market activity.

With inflationary pressures persisting and geopolitical risks still elevated, traders will be watching the Fed’s September policy meeting closely for cues on whether gold can resume its upward run or face further profit-taking.

(With inputs from the agencies)