Gold prices rebound from 13-month low as major investors return

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Highlights

Spot gold rises 0.42% after selloff.
Fed rate-hike bets pressure bullion.
Dip buying supports gold recovery.

Spot gold climbed 0.42% to $3,892.926 an ounce, while December gold futures advanced 0.29% to $3,896.47, according to the latest market quotes. Bloomberg described renewed buying interest from long-term investors following Thursday's decline to a 13-month low, although bullion remained on course for a weekly loss.

Gold attracts buyers after sharp selloff

The precious metal lost more than 6% over three trading sessions as stronger-than-expected U.S. inflation figures prompted investors to reassess the Federal Reserve's interest-rate outlook. Gold briefly fell to its lowest level in 13 months on Thursday, extending a decline that began as expectations for tighter monetary policy intensified.

The selloff coincided with a sharp increase in U.S. Treasury yields, with some securities recording gains of more than 12 basis points. Short-term government bonds experienced particularly strong selling pressure because their yields respond closely to changes in anticipated Federal Reserve policy.

The subsequent recovery suggests that some institutional investors viewed the decline as an opportunity to increase their holdings. Central banks, reserve managers and other long-term buyers have previously supported gold during periods of pronounced weakness, particularly around the psychologically important $4,000 level.

Federal Reserve rate expectations remain a major obstacle

The latest U.S. inflation data have strengthened expectations that the Federal Reserve will raise borrowing costs again in December. Traders are increasingly pricing in a quarter-percentage-point increase, while a smaller group anticipates a more aggressive half-point adjustment.

Federal Reserve officials have also reinforced concerns that inflation remains persistent. New York Fed President John Williams and Chicago Fed President Austan Goolsbee highlighted continued price pressures, while San Francisco Fed President Mary Daly indicated that additional tightening could be necessary.

Higher interest rates generally reduce the appeal of gold because the metal offers no regular income. Rising Treasury yields also increase the opportunity cost of holding bullion, making government securities relatively more attractive.

Gold market faces competing pressures

The rebound has not erased the broader pressure on precious metals. Gold remains vulnerable to further increases in bond yields, particularly if upcoming economic data reinforce expectations of additional Federal Reserve tightening beyond December.

Middle East developments have complicated the outlook. Higher energy costs following the U.S.-Iran conflict have contributed to inflation concerns, encouraging central banks to maintain restrictive policies even as geopolitical uncertainty supports demand for defensive assets.

The $4,000-per-ounce level remains a key reference point for the gold market. Whether bullion can return above that threshold will depend on the strength of institutional demand and the direction of U.S. monetary policy.

As we previously reported, Heliostar targets 10-fold gold output increase in Mexico by 2030.

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