Gold softens on prospects of Fed rate hikes as Brent tops $100

Gold edged lower on Friday after falling 2% in the last session, as Brent crude's move back above $100 a barrel stoked inflation concerns and strengthened the case for higher interest rates.

FUNDAMENTALS

Spot gold eased 0.1% to $4,042.77 per ounce by 0110 GMT, with prices down more than $120 from a two-week high hit on Wednesday. U.S. gold futures for August delivery were 0.1% lower at $4,045.60.

Bullion was ‌on track for ⁠a ⁠small weekly gain of 0.6%.

U.S. President Donald Trump promised on Thursday "major military punishment" for Iran and its Houthi allies, after the Yemeni fighters struck two Saudi oil tankers in the Red Sea.

Brent crude surged 7% on Thursday, breaking through $100 a barrel for the first time since May in one of the steepest rises since the war has started.

The dollar rode U.S. Treasury yields higher, with benchmark 10-year yields at ⁠their highest since ‌January 2025.

The U.S. Federal Reserve is widely expected to keep rates unchanged next week, although traders are pricing in about an 81% chance ⁠of a hike in September, according to the CME FedWatch Tool.

The European Central Bank kept interest rates unchanged as expected on Thursday but held the door open to another increase in September.

Higher interest rates reduce the appeal of non-yielding gold.

Thailand's central bank has proposed cash payment limits for physical gold bar trades at gold shops to improve transparency and oversight of transactions that could affect exchange rates.

Newmont, the world's biggest gold miner, beat second-quarter profit estimates on ‌Thursday after a rally in bullion prices outweighed the impact of lower output.

Azerbaijan's sovereign oil fund SOFAZ kept its total gold holdings unchanged at 178.1 metric tons in the ⁠second quarter.

African Rainbow Minerals said its board has approved a phased 15.2 billion rand ($927.28 million) upgrade of its Bokoni platinum group metal operations as well as the resumption of nickel mining at Nkomati.

Spot silver was down 0.2% at $57.56 per ounce, platinum fell 0.5% to $1,592.97 and palladium dropped 0.8% to $1,246.72.

DATA/EVENTS (GMT)

0130 Japan S&P Global Mfg PMI Flash SA Jul

0130 Japan S&P Global Comp Op Flash SA Jul

0130 Japan S&P Global SVC PMI Flash SA Jul

0600 UK Retail Sales MM, Ex-Fuel MM, YY Jun

0800 EU S&P MFG, Services, Composite Flash PMI Jul

0830 UK Flash Composite, Manufacturing, Services PMI Jul

1345 US S&P Global Mfg, Svcs, Comp PMI Flash Jul

1400 US New Home Sales-Units Jun