Gold Prices Decline Amid Anticipation of US Interest Rate Hike

Gold prices declined in early Asian trading on Friday, following a drop of more than one percent in the previous session, as persistent inflation in the United States increased expectations of another interest rate hike, negatively impacting the precious metal. Spot gold prices fell 0.4% to $4006.06 per ounce, while U.S. gold futures for December delivery dropped 0.3% to $4018.50. Gold is set for modest weekly gains but is on track for a second consecutive monthly loss. U.S. inflation accelerated in September, driven by rising gasoline and consumer goods costs, supporting economists' forecasts of a rate hike in December. The CME FedWatch tool indicates about a 75% probability of an interest rate increase in December. Higher interest rates raise the opportunity cost of holding non-yielding gold, reducing its appeal to investors. Meanwhile, the European Central Bank kept interest rates unchanged on Thursday but signaled a likely hike in December, warning of rising inflation risks due to increasing energy costs. It also announced that President Christine Lagarde will step down on February 7. Data released today showed Tokyo's annual core inflation exceeded the central bank's 2% target in October, highlighting mounting price pressures and reinforcing the case for monetary tightening. Other precious metals saw declines: spot silver fell 1% to $51.87 per ounce, platinum held steady at $1488, and palladium dropped 0.5% to $1000.75, with all three metals trending toward weekly and monthly losses.