International gold prices managed to hold onto their gains at the end of a volatile trading week, as the Federal Reserve's first rate hike since 2023, combined with a drop in oil prices, helped alleviate market concerns over inflationary pressures.
Spot gold was trading near $4,350 per ounce on Friday, following a nearly 2% surge on Thursday that erased most of the losses incurred over the previous three trading sessions. The rebound came after U.S. Treasury yields initially spiked in the wake of the Fed's unanimous decision on Wednesday to raise interest rates by 25 basis points, but then retreated across all maturities. This shift in yields relieved some of the pressure that had been weighing on gold. As the precious metal does not pay interest, it typically underperforms in an environment of higher bond yields.
Meanwhile, oil prices extended their decline for a third consecutive day, as concerns over potential supply disruptions in the Middle East appeared to ease, thereby reducing the threat of energy costs feeding into broader inflation. Saudi Arabia has moved to restore flows through a key pipeline within days, while some tankers continue to navigate the still-tense Strait of Hormuz. The rally on Thursday lifted gold back above its 100-day moving average, a widely watched technical indicator used to gauge momentum.
Despite this recovery, bullion prices remain nearly a fifth below the levels seen in late February, before the outbreak of the Iran war. Over the past several weeks, investors have been pouring into gold, betting that the metal's longer-term fundamental drivers will persist. Even as prices have pulled back, gold ETFs have continued to register steady inflows. However, comments from Fed Chair Kevin Warsh have fueled market expectations that at least one more rate hike could be on the horizon this year, with the possibility of up to two additional increases by 2027, posing a potential headwind for gold.
As of the time of writing, spot gold was up 0.05%, trading at $4,348 per ounce. Silver advanced 0.5% to $65.74 an ounce, following a 3.6% jump the previous day. Platinum and palladium also edged higher. The dollar spot index, which measures the greenback against a basket of major currencies, was largely flat after slipping 0.1% in the prior session.