Gold Price Volatility Continues Amid Hawkish Fed Outlook

Gold prices have been struggling to move above $4,400 on Friday as the US Dollar remains firmly bid due to the Federal Reserve's hawkish policy outlook. Despite this, gold is still poised for its first weekly gain in three weeks.

The metal has been volatile this week, plummeting to a one-month low of $4,235 on Wednesday after the Fed raised interest rates by 25 basis points to the 3.75%-4.00% range. This move pushed the US Dollar and Treasury yields higher, sending gold sharply lower.

However, the post-Fed pressure was offset by falling oil prices, which eased after reports that Saudi Arabia is rerouting some exports and working to repair its East-West pipeline damaged in an attack last week. The pipeline lets Saudi oil reach the Red Sea without passing through the Strait of Hormuz.

The bigger question now is whether gold can build on its rebound. The Fed signalled that additional rate increases could come as policymakers remain committed to bringing inflation back to the central bank's 2% target. Higher borrowing costs increase the opportunity cost of holding non-yielding assets like gold, making it challenging for the metal to recover further.