Gold prices rebound from 2-month low! The risk of the Federal Reserve raising interest rates has not been eliminated. Analysts name $4,000 as the key support

Gold prices rose for the second consecutive trading day on Friday (9th), hitting a one-week high during the session. (AFP)

[Financial Channel/Comprehensive Report] Gold prices rose for the second consecutive trading day on Friday (9th), hitting a one-week high during the session. Dip buying has begun after gold prices fell to a two-month low earlier this week, while traders assessed the possibility of further interest rate hikes by the U.S. Federal Reserve.

Spot gold rose 1.5% to US$4,194.36 per ounce, a weekly increase of approximately 1.3%. Gold prices fell to a two-month low on Wednesday (7th) as the dollar strengthened and U.S. Treasury yields rose, putting pressure on gold, which does not yield interest.

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U.S. gold futures for December delivery rose 1.4%, settling at $4,216.3 an ounce.

Rhona O'Connell, director of market analysis at StoneX, said the rise in gold prices was due to "dip buying when prices were at lows, and a price bottom has gradually formed near $4,000."

She said: "It can be said that the market has priced in the expectation that the Federal Reserve may raise interest rates further, but it has also reflected the expectation that the official sector will continue to be a net buyer of gold. Without any black swan events, it is difficult for me to think that gold prices can clearly and significantly move higher."

U.S. 10-year Treasury yields have fallen from more than 20-year highs hit on Wednesday.

St. Louis Fed President Alberto Musalem said on Thursday that the Fed would need to raise interest rates again to get inflation back to its 2% target.

Traders currently estimate a 19% chance of a rate hike in October and an 84% chance of at least a 25 basis point hike in December, according to CME Group's FedWatch tool.

In a high interest rate environment, gold tends to lose its appeal compared to yield-producing assets.

Han Tan, chief market analyst at cryptocurrency trading platform Bybit, said: "The Consumer Price Index (CPI) released next week may become a catalyst for the next major trend in gold prices. If inflation continues to remain high, forcing the Federal Reserve to adopt a more substantial interest rate hike cycle, spot gold prices may once again test the psychologically meaningful support price of $4,000."

On the other hand, as gold prices rebounded, gold demand in India this week was weak; in China, the world's largest gold consumer, the trading day was shortened due to holidays, and market trading activities were relatively light.

In terms of other precious metals, spot silver rose 2.4% to US$60.77 per ounce; platinum rose 3.1% to US$1,685.64 per ounce; palladium rose 2.1% to US$1,146.39 per ounce.

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