Gold extended its recovery at the end of a turbulent week, supported by a decline in oil prices that eased inflation concerns, even as traders weighed the Federal Reserve's rate path following its first increase since 2023. Bullion was trading around $4,350 an ounce, having climbed back above its 100-day moving average, a key momentum indicator.
Oil's retreat supports gold
The drop in crude prices has been central to gold's rebound. Earlier, higher energy costs had reinforced expectations that interest rates would stay elevated for longer — a headwind for non-yielding assets like gold. The turning point came on Thursday when Saudi Arabia moved to restore flows along its crucial East-West pipeline within days, easing worries about supply disruptions in the Middle East.
With those disruptions set to ease, investors have become less concerned about sustained inflation, which in turn reduces the pressure on the Fed to keep monetary policy tight. That shift has helped gold recover from recent losses, though the metal remains nearly a fifth below its record high set in January.
Fed's rate path in focus
The Federal Reserve's first rate hike since 2023 has been a key driver for gold this week. While higher rates typically weigh on gold by increasing the opportunity cost of holding it, analysts at Goldman Sachs Group Inc., including Lina Thomas, argue that the impact is likely to be limited.
In a note, they wrote that much of the expected tightening already appears priced into ETF demand, while stronger-than-expected central bank purchases continue to offset the drag from higher rates. They also pointed to resilient call-option demand for gold as a macro-policy hedge. The bank cut its year-end gold price target to $4,650 an ounce from $4,900, but still sees further gains ahead.
Investor demand remains firm
Investor interest in gold has been building for weeks. Gold-backed exchange-traded funds tracked by Bloomberg recorded eight consecutive days of inflows, the longest streak since October 2025. That persistent buying, alongside central bank purchases, suggests the long-term drivers of the metal remain intact.
Spot gold rose 0.3% to $4,355.90 an ounce at 11:21 a.m. in New York. Silver advanced 1.8% to $66.38 an ounce, while platinum and palladium also gained. The Bloomberg Dollar Spot Index, a gauge of the US currency, was up 0.2%.
Key takeaways
- Gold traded around $4,350 an ounce, up 0.3%, after recovering above its 100-day moving average.
- Lower oil prices, helped by Saudi Arabia's pipeline restoration, eased inflation concerns.
- Goldman Sachs cut its year-end target to $4,650 but expects the Fed's tightening to slow, not derail, the rally.
- Gold-backed ETFs saw eight straight days of inflows, the longest streak since October 2025.
Common questions
Why did gold rise despite a Fed rate hike?
Gold rose as falling oil prices eased inflation worries, reducing the need for aggressive Fed tightening. Analysts also noted that much of the expected tightening was already priced into ETF demand, and central bank purchases continue to support prices.
What is the 100-day moving average?
The 100-day moving average is a technical indicator that smooths price data over the past 100 days. When gold trades above it, it is often seen as a bullish signal by traders.
How do higher interest rates affect gold?
Higher interest rates increase the opportunity cost of holding non-yielding assets like gold, which can weigh on prices. However, other factors, such as central bank buying and safe-haven demand, can offset this pressure.
For the latest moves, follow the live gold price.
Gold's resilience this week reflects a delicate balance between easing near-term inflation pressures and the Fed's tightening cycle. While the metal remains below its record, steady investor inflows and central bank demand suggest underlying support.