Gold prices rose on Friday as lower oil prices and falling US Treasury yields eased inflation concerns.
The move helped bullion recover after the Federal Reserve raised interest rates earlier in the week.
Gold is now on track to finish a volatile week higher. However, expectations for additional Fed rate hikes remain a challenge for the precious metal.
Gold Prices Extend Recovery
Spot gold, or XAU/USD, rose around 0.6% to $4,368.60 an ounce.
Gold futures gained about 0.2% to $4,408.22.
Other precious metals also moved higher. Silver climbed 1.6% to $66.28 an ounce, while platinum rose 1.5% to $1,799.03.
Palladium gained 2.4% to $1,321.
Meanwhile, the US Dollar Index was little changed near 100.24.
Spot gold is up about 0.5% so far this week after suffering a sharp decline earlier in the period.
The metal recovered more than 2% on Thursday after touching a near six-week low on Wednesday.
Lower Treasury Yields Support Gold
Gold has recovered much of the ground lost during the previous three sessions.
US Treasury yields fell across several maturities after initially jumping following the Federal Reserve’s latest rate decision.
The Fed unanimously raised interest rates by 25 basis points on Wednesday.
Falling bond yields generally support gold because bullion does not pay interest.
When yields decline, the opportunity cost of holding non-yielding assets such as gold becomes less significant.
Lower Oil Prices Ease Inflation Concerns
Oil prices also fell for a third consecutive session.
Improving expectations around Middle East supply disruptions helped reduce pressure on energy markets.
Saudi Arabia said it expects flows through a key pipeline to resume within days.
At the same time, some tankers have continued to pass through the Strait of Hormuz.
The decline in oil prices has helped ease concerns about renewed inflation pressure.
That, in turn, has supported gold prices by reducing fears that the Federal Reserve may need to tighten monetary policy even more aggressively.
Hawkish Fed Outlook Remains a Risk for Gold
Despite the rebound, the longer-term outlook remains complicated.
Fed Chair Kevin Warsh has continued to emphasize concerns about inflation.
His comments have encouraged markets to expect at least one additional rate increase this year.
Investors are also considering the possibility of further rate hikes in 2027.
Higher interest rates typically weigh on gold because they increase the appeal of yield-bearing assets.
As a result, expectations for tighter US monetary policy could continue to limit gold’s upside.
Gold Reclaims Key Technical Level
Friday’s gains pushed gold back above its 100-day moving average.
Traders often use this level as a gauge of medium-term market momentum.
Even after the latest recovery, gold remains almost 20% below the levels seen before the Iran conflict began in late February.
However, investor demand for bullion remains relatively strong.
Gold ETF Demand Continues to Strengthen
Investors have continued increasing their exposure to gold despite the prospect of higher interest rates.
Gold-backed exchange-traded funds tracked by Bloomberg have recorded billions of dollars in inflows.
ANZ also reported that holdings in these funds have risen for eight consecutive sessions.
ANZ analysts pointed to strong demand for options linked to some of the largest gold-backed ETFs.
This suggests investors remain active in the gold market despite uncertainty surrounding Federal Reserve policy.
Gold Outlook Remains Focused on Yields and Fed Policy
Gold’s latest recovery has been supported by falling Treasury yields, weaker oil prices and renewed investment demand.
However, the Federal Reserve remains one of the most important factors for the market.
Further rate hikes could limit gains, while lower yields and easing inflation pressure could continue to support bullion.
Traders will therefore remain focused on US Treasury yields, inflation data, Federal Reserve policy and gold ETF flows for the next major direction in gold prices.
