TLDR
- Spot gold climbed 1.0% to $4,385.76 an ounce on Friday, on track for a weekly gain of around 0.9%
- Oil prices fell for a third straight day after Saudi Arabia said it expects to restore a key pipeline within days
- The Bank of Japan raised interest rates Friday, joining the Fed and ECB in tightening monetary policy
- A softer dollar, driven by easing oil prices, gave gold extra support
- Gold-backed ETF inflows have risen for eight straight sessions, according to ANZ analysts
Gold prices pushed higher on Friday, heading for a modest weekly gain as falling oil prices and a slightly softer dollar gave the precious metal a lift.
Spot gold rose 1.0% to $4,385.76 an ounce in early trading. Gold futures added 0.6% to reach $4,425.20 an ounce. New York gold futures were up 0.8% to $4,434.90 in early European trade.
The weekly gain stands at around 0.9%. Gold bounced back more than 2% on Thursday after hitting a near six-week low the day before.
Oil prices dropped for a third straight day. Saudi Arabia said it expects to restore flows through a key pipeline within days. China also stepped up diplomatic efforts to limit the influence of Houthi militants, who have tightened their grip on the Bab el-Mandeb Strait.
The easing in oil prices has reduced fears that energy-driven inflation would push central banks to raise rates even faster.
Central Banks Keep Raising Rates
The Bank of Japan raised interest rates on Friday, saying inflation is getting close to its 2% annual target. The move follows rate hikes from the Federal Reserve and the European Central Bank.
The Fed raised rates for the first time in three years on Wednesday. Analysts at ING said easing oil prices have taken some pressure off the dollar following that hike.
However, ING also flagged upside risks to the dollar. The Fed’s hawkish tone has given markets the green light to fully price in another hike in October if inflation data and energy prices support it.
A stronger dollar can weigh on gold by making it more expensive for buyers using other currencies. The U.S. dollar index was up 0.1% at 100.38 on Friday.
ETF Inflows Point to Steady Demand
Gold-backed exchange traded funds tracked by Bloomberg recorded billions of dollars in inflows recently. ANZ analysts said holdings in those funds have grown for eight sessions in a row.
ANZ also pointed to strong demand for options on some of the largest gold-backed funds. This suggests traders are staying active in gold even as higher interest rates raise the cost of holding the metal.
Analysts at Saxo Bank said gold’s resilience stands out given that the Fed has just started a new hiking cycle and the dollar remains relatively firm.
They added this points to continued demand from investors who are less sensitive to the traditional relationship between rates, the dollar, and gold.
Higher interest rates typically increase the opportunity cost of holding gold, which pays no yield. That pressure remains in place as more rate hikes are expected later this year.
Gold’s ability to hold above the $4,400 mark despite those headwinds has caught the attention of analysts heading into the weekend.
Stop guessing and start investing with confidence. KnockoutStocks gives you the AI insights, market intelligence, and stock research you need to spot opportunities, cut through the noise, and make smarter investment decisions — all in one powerful platform.
Sign up today and get 50% OFF full access to our premium stock picks.
Simply use coupon code SPECIAL50 at checkout to claim your exclusive discount.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
