Gold Bounces Back Towards $4,400 Amid Escalating Middle East Tensions
Gold prices rebounded to $4,379 on Friday after earlier dropping to a near two-month low of $4,235. The Federal Reserve's decision to raise interest rates by 0.25% and its dot plot pointing to at least one more increase in the coming months weighed on gold initially.
However, escalating tensions in the Middle East, including US-Iran clashes in the Persian Gulf and ongoing conflict between the Houthis and Saudi Arabia, offset the impact of higher interest rates. Oil prices softened despite these developments, while the US Dollar Index (DXY) remained nearly flat at 100.29.
The Bank of England held its interest rate steady, but the Bank of Japan increased its policy rate by 25 basis points to 1.25%. Central banks added a significant amount of gold in 2022, purchasing 1,136 tonnes worth around $70 billion.