Gold held its gains at the end of a turbulent week, trading around $4,350 an ounce. This stability followed a nearly 2% surge on Thursday, which recovered much of the week's earlier losses. The Federal Reserve's first interest-rate hike since 2023, coupled with lower oil prices, contributed to easing inflation fears, which in turn supported gold prices.
The Fed's unanimous decision on Wednesday to raise rates by a quarter percentage point initially caused Treasury yields to spike. However, yields subsequently declined across maturities, lessening the pressure on gold. Gold typically underperforms when bond yields are high because it does not offer interest payments to investors.
Oil prices have been falling for three consecutive days as concerns about supply disruptions in the Middle East, particularly in the Strait of Hormuz, have begun to subside. Saudi Arabia is working to restore flows along a key pipeline within days, and some tankers have continued to navigate the contested Strait, relieving energy cost pressures that had been contributing to inflation. This decline in oil prices further supported gold's rebound.
