Gold prices moved higher on Friday as the U.S. dollar weakened and oil prices declined. However, the rebound was not enough to prevent gold from heading toward a weekly loss.
Bullion remained under pressure throughout the week as a stronger dollar, rising Treasury yields and renewed inflation concerns weighed on investor sentiment.
Gold Prices Recover on Friday
Spot gold gained 0.3% to trade at $4,285.76 per ounce at 16:35 ET (20:35 GMT).
Meanwhile, gold futures climbed 0.6% to $4,321.62 per ounce.
Friday’s recovery was supported by weakness in the U.S. dollar, which made gold cheaper for investors holding other currencies.
Lower oil prices also provided some relief by easing concerns about energy-driven inflation.
Strong Dollar Weighs on Gold
Despite Friday’s gains, gold remained on course for a weekly decline.
The U.S. dollar had strengthened during much of the week, creating additional pressure on precious metals. Gold and the dollar often move in opposite directions because bullion is priced in the U.S. currency.
A stronger dollar can therefore make gold more expensive for international buyers and reduce demand.
Rising Treasury Yields Pressure Bullion
Higher U.S. Treasury yields were another major headwind for gold prices.
A sharp sell-off in government bonds pushed yields higher, increasing the attractiveness of interest-bearing assets compared with gold.
Because gold does not generate interest or income, rising bond yields can reduce its appeal among investors seeking returns.
Fed Rate Hike Expectations Increase
Markets also reassessed the outlook for Federal Reserve monetary policy during the week.
Concerns over energy-related inflation contributed to expectations that the Fed could maintain a more hawkish stance on interest rates.
Growing expectations for additional rate hikes supported both the U.S. dollar and Treasury yields, creating further pressure on gold.
As a result, the outlook for gold remains closely linked to inflation trends, Treasury yields and expectations surrounding the Federal Reserve’s next policy moves.
