Gold Hits One-Week High as Oil Prices Fall Amid Middle East Tensions

Gold prices rose for the second consecutive session on Friday, hitting a one-week high, as oil prices fell due to easing concerns over supply disruptions. The precious metal's increase came despite the US Federal Reserve's hawkish signals earlier in the week, which could normally curb its demand by increasing the appeal of yield-bearing assets.

The spot gold price rose 1.1% to $4,387.69 per ounce by 0829 GMT, while US gold futures increased 0.6% to $4,428. The precious metal's growth also extended to other metals, with silver rising 2.7% to $66.98, platinum gaining 2.6% to $1,814.95, and palladium adding 3.1% at $1,330.95.

Han Tan, chief market analyst at Bybit, said that the precious metal appears to have taken the Fed's signals in stride, instead finding immediate relief from falling oil prices amid hopes that the Fed's hiking cycle will prove shallow. Goldman Sachs also weighed in on gold's prospects, stating that it expects 'the impact of tighter monetary policy to be felt primarily through a slower near-term appreciation path rather than a lower terminal gold price.'

The Middle East conflict remains a key factor influencing gold prices, with some analysts predicting that if the conflict prolongs and oil prices remain high well into next year, central banks may raise rates more than investors expect, putting downward pressure on gold prices. The Bank of Japan also raised interest rates to a 31-year high and signaled its readiness to keep pushing up borrowing costs.