Spot gold climbed toward $4,374/oz on Friday, locking in a 0.7% gain for the week as a soft U.S. retail sales report and cooling inflation figures led markets to dial back Federal Reserve interest rate hike expectations.
While lower interest rate expectations traditionally bolster non-yielding bullion, stronger crude oil prices driven by escalating Middle East shipping tensions capped the metal’s upside.
Key Market Drivers & Economic Indicators
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Weak Retail Sales Miss: U.S. retail sales fell 0.6% month-on-month in July (versus a projected +0.1% growth), while core retail sales dipped 0.3%. Combined with weaker consumer sentiment (51 in August down from 55.2), the data signaled mounting pressure on household budgets.
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Repricing Fed Expectations: Cooling CPI and PPI prints earlier in the week—coupled with July’s weak payrolls data—further reduced the probability of an imminent rate hike.
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According to the CME FedWatch Tool, the odds of a rate hold in September rose to ~67% (up from 56% a week prior).
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The likelihood of a 25 bps rate hike dropped to 33%.
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Middle East Oil Friction Caps Bullion: Brent crude jumped 1.5% to $88.40/barrel (+5.9% for the week) amid a diplomatic standoff between the U.S. and Iran over the Strait of Hormuz and ongoing Houthi attacks in the Bab el-Mandeb Strait. Higher oil prices fueled underlying inflation fears, keeping Treasury yields slightly elevated on Friday.
Friday Market Closing Snapshot
| Asset / Indicator | Price / Yield | Daily Change | Weekly Performance |
| Spot Gold (XAU/USD) | $4,374.30 / oz | +0.50% | +0.70% |
| Gold Futures (GC) | $4,430.05 / oz | +0.26% | +0.70% |
| Brent Crude Oil (LCO) | $88.40 / barrel | +1.76% | +5.90% |
| U.S. 2-Year Treasury Yield | 3.75% | +0.75% | Weekly Loss |
| U.S. 10-Year Treasury Yield | Standard Benchmark | +1.19% | Weekly Gain |
