Gold continued its notable decline on Friday as it remained beneath the bearish channel’s lower line on the four-hour timeframe. The yellow metal is currently poised to resume its decline, heading toward support levels at $4097 then $4,039. On the upside, if the price gains positive momentum, it may retest the daily pivot point at $4180 then resistance levels near $4258 $4318.
Financial markets remained focused on U.S. monetary policy and global energy developments on Friday, as the U.S. dollar climbed to its highest level in one year amid growing expectations of further Federal Reserve tightening. Meanwhile, oil prices moved lower as crude supplies continued to flow through the Strait of Hormuz without major disruptions, easing concerns over potential supply shortages. At the same time, market expectations for a Federal Reserve interest rate hike in December surged to 87%, reinforcing the dollar’s strength and shaping investor sentiment across currency, commodity, and equity markets.
Market Watch
Dollar Reaches Its Highest Level in One Year
The U.S. dollar posted strong gains during Friday’s trading session, climbing to its highest level in a year as investors increased their bets that the Federal Reserve could raise interest rates in the coming months.
The U.S. Dollar Index (DXY), which measures the greenback against a basket of major currencies, rose to its strongest level since mid-2025 after comments from Federal Reserve officials reinforced expectations that policymakers may maintain a hawkish monetary policy stance to combat inflationary pressures.
The dollar’s rally came as several major currencies weakened, with the euro and British pound falling to multi-week lows against the U.S. currency. Meanwhile, the Japanese yen hovered near its weakest levels in decades as the gap between U.S. and Japanese monetary policies continued to widen.
Market analysts noted that resilient U.S. economic data and rising Treasury yields have supported demand for the dollar. Investors are now closely watching upcoming economic releases and Federal Reserve communications for further clues regarding the path of interest rates during the second half of the year.
Current market expectations suggest a growing likelihood of additional U.S. interest rate hikes in the coming meetings, a factor that continues to support the dollar and strengthen its appeal as a safe-haven asset amid ongoing uncertainty in global financial markets.
Oil Falls as Supply Moves Through Strait of Hormuz
Oil prices declined during Friday’s trading session as concerns over potential supply disruptions in the Middle East eased, with data showing that crude shipments continued to move through the Strait of Hormuz without significant interruptions, reducing the geopolitical risk premium that had supported prices in recent days.
Brent crude futures fell by around 1% to trade near $78 per barrel, while U.S. West Texas Intermediate (WTI) crude slipped below $75 per barrel as investors took profits following the strong gains recorded earlier this week.
Oil markets had rallied in previous sessions amid fears that regional tensions could disrupt shipping activity through the Strait of Hormuz, one of the world’s most important energy chokepoints, through which a substantial share of global oil and petroleum product supplies passes every day.
However, the continued flow of shipments and the absence of any major disruptions to maritime traffic helped calm market concerns, prompting traders to reassess the geopolitical risks associated with the region.
Crude prices also faced additional pressure from the strength of the U.S. dollar, which climbed to its highest level in a year. A stronger dollar makes dollar-denominated commodities more expensive for holders of other currencies, potentially weighing on global demand.
Investors are now closely monitoring developments in the Middle East, along with U.S. inventory data and global demand indicators, which could provide further direction for oil prices in the coming sessions.
December Fed Hike Odds Jump to 87%
Market expectations for a U.S. Federal Reserve interest rate hike at its December meeting increased sharply, with futures market data indicating that the probability of an additional rate increase has risen to approximately 87%, amid continued economic resilience and persistent inflationary pressures.
The shift in expectations follows a series of economic reports highlighting the strength of the U.S. labor market and consumer spending, while inflation indicators remain above the Federal Reserve’s long-term target.
Expectations for tighter monetary policy were further reinforced by comments from several Federal Reserve officials, who emphasized that the fight against inflation is not yet complete and that additional policy actions may be required to ensure price stability over the longer term.
The increase in rate hike expectations provided support for the U.S. dollar, which climbed to its highest level in a year against a basket of major currencies. Meanwhile, gold prices came under pressure as rising Treasury yields and a stronger dollar reduced the appeal of non-yielding assets.
Investors are now closely monitoring upcoming economic data releases, particularly inflation and labor market reports, for further clues regarding the future path of U.S. monetary policy.
Current market pricing suggests that investors increasingly expect the Federal Reserve to maintain a hawkish stance in the coming months, a development that could continue to influence movements across global currency, commodity, and equity markets.