Gold heads for weekly loss as investors unwind inflation-fuelled rally

Gold prices eased on Friday and were set for a weekly loss as investors cashed in gains after softer US inflation readings lifted bullion to a level last seen more than two months ago. Business Recorder reported that spot gold traded 0.5% lower at $4,326.75 an ounce by 0336 GMT, while December US gold futures slid nearly 1% to $4,382.50. The metal had reached a peak not seen since June 5 on Thursday before closing 1.3% lower.

The rally had been fuelled by a surprise decline in US payroll figures for July last week, followed by cooler inflation numbers this week, which reduced the odds of a Federal Reserve rate increase next month. Traders now assign a 35% probability to a September hike, down from roughly 55% a week earlier, per the CME FedWatch Tool. Lower interest rates make non-yielding gold more appealing compared with assets that pay income.

Ilya Spivak of Tastylive said some speculative money was taking profits as no strong near-term catalyst is in view. He also said gold might still set up for a meaningful rally, though trading could stay choppy. Spot silver fell 0.4% to $64.17 an ounce, while platinum dipped 0.3% to $1,711.84 and palladium held steady at $1,306.98, with both heading for weekly losses.