Oil Price Drop Eases Pressure on Gold Prices

Gold prices ended a four-week losing streak last week after falling oil prices eased one of the main arguments for prolonged Federal Reserve tightening.

The decline in Brent crude by 4.21% for the week, its sharpest weekly drop in months, gave gold some relief from the twin pressures of a hawkish Fed and a stronger dollar.

Spot gold reached $4,390 an ounce on Friday before settling near $4,375-$4,380, its highest level in a week. However, this gain does not resolve the central tension, as rate hikes are structurally bearish for gold, lifting the opportunity cost of holding a non-yielding asset.

David Meger, director of metals trading at High Ridge Futures, noted that the gold market had been 'tied very closely to an inverse relationship with energy prices based on those inflationary pressures.'