Gold Prices Rise as Falling Oil and Treasury Yields Ease Inflation Concerns

Gold prices advanced on Friday, rebounding from a mid-week slump as a pullback in U.S. Treasury yields and crude oil prices offered some relief from inflation concerns. The move puts the precious metal on track for a weekly gain despite the Federal Reserve's latest interest rate increase.

By 9:28 PM ET (01:28 GMT), spot gold (XAU/USD) had risen 0.5% to $4,361.31 an ounce, while gold futures were little changed at $4,399.87. Other precious metals also gained, with spot silver up 1% to $65.88 an ounce and platinum rising 1% to $1,790.41.

Yields and Oil Retreat

The rally in gold was supported by two key factors. First, U.S. Treasury yields declined across maturities after surging earlier in the week following the Fed's policy announcement. This retreat in yields reduces the opportunity cost of holding non-interest-bearing assets like gold.

Second, oil prices fell for a third consecutive day, easing concerns about energy-driven inflation. According to reports, Saudi Arabia expects to restore flows through a key pipeline, and some tanker traffic has continued through the Strait of Hormuz, improving the supply outlook.

Fed's Hawkish Stance Looms

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This week's recovery follows the Federal Reserve's unanimous decision on Wednesday to raise interest rates by 25 basis points. While the market has since stabilized, the central bank's policy path remains a significant headwind for bullion.

Comments from Fed Chair Kevin Warsh have led markets to price in at least one more rate increase this year and potentially more in 2027. A higher interest rate environment typically weighs on gold, which does not offer a yield.

Investor Demand Holds Firm

Despite the challenging monetary policy outlook, investor interest in gold appears robust. Thursday's rebound pushed spot gold back above its 100-day moving average, a technical indicator watched for market momentum.

Data from analysts at ANZ shows that holdings in gold-backed exchange-traded funds (ETFs) have increased for eight consecutive sessions, with billions of dollars in recent inflows. ANZ also noted strong demand for options contracts on major gold ETFs, suggesting investors remain active in the market.