Oil Price Plunge Ignites Gold Rally to One-Week High

Gold prices rebounded to a one-week high on Friday, reaching $4,390.11 per ounce after four consecutive weeks of declines. This marked the first weekly gain for gold since August 28, and spot gold climbed 1.2% from Thursday's close.

The surge in gold prices was driven by a sharp drop in oil prices, which tumbled for a third straight session as concerns over Saudi Arabian supply disruptions eased. West Texas Intermediate (WTI) crude for October delivery dropped 2.17% on Thursday to settle at $99.70 per barrel, and oil prices briefly dipped below the $100 threshold intraday.

EverBank World Markets President Chris Gaffney noted that lower oil prices reduce inflationary pressures because oil has been a primary driver of overall inflation. As oil prices fell, investors who had heavily shorted gold rapidly covered their positions, contributing to the rebound in gold prices.