Gold Prices Rebound on Lower Oil and Yields

Gold prices rebounded on Friday after the Federal Reserve's interest rate hike earlier this week. The rise in gold came as lower oil and Treasury yields eased inflation concerns, supporting bullion's recovery from its near six-week low touched on Wednesday. Spot gold rose 0.6% to $4,368.60 an ounce, while gold futures gained 0.2% to $4,408.22. The metal has recovered much of the loss from the previous three sessions after rising almost 2% on Thursday.

Lower oil prices and a weaker dollar also contributed to the rebound in gold. Oil fell for a third straight day as the outlook for supply disruptions in the Middle East improved, with Saudi Arabia expecting to restore flows through a key pipeline within days. Treasury yields declined across maturities after surging following the Fed's decision to raise interest rates by 25 basis points on Wednesday.

Despite the rebound, gold remains nearly 20% below levels seen before the Iran war began in late February. The longer-term policy outlook for gold is still challenging due to expectations of at least one more rate increase this year and as many as two additional hikes in 2027. However, investors have continued increasing their exposure to bullion, betting that its drivers will remain intact.

Gold-backed ETFs tracked by Bloomberg have recorded billions of dollars in inflows, while ANZ analysts pointed to strong demand for options on some of the largest gold-backed ETFs. This suggests that investors remain active despite expectations for tighter monetary policy.