Gold Surges to One-Week High as Oil Prices Ease and Fed Rate Hike Takes Hold
Gold prices surged to a one-week high on Friday, buoyed by lower oil prices and a subdued US dollar. Spot gold rose 0.9% to $4,378.97 an ounce, while US gold futures increased 0.4% to $4,418.50.
The rally comes despite the Federal Reserve's first rate hike in three years, which some analysts expected to curb demand for gold as a hedge against inflation. However, Han Tan, chief market analyst at Bybit, said that gold has 'taken the Fed's hawkish signals in its stride,' instead finding relief from falling oil prices.
The Bank of Japan raised interest rates to a 31-year high and signalled its readiness to keep pushing up borrowing costs. This move joins other major central banks in fighting persistent inflation pressures, but experts warn that if the conflict in the Middle East prolongs and oil prices remain high, central banks may raise rates more than expected, putting downward pressure on gold prices.