Gold Prices Reach One-Week High Amid Declining Oil

Gold prices rose to a one-week high on Friday and are poised for its first weekly gain in four, thanks in part to declining oil prices that eased inflation concerns. The firmer US dollar and the Federal Reserve's latest rate hike kept the move contained.

Lower energy prices tend to reduce markets' inflation worries, allowing investors to dial back their demand for gold as an 'inflation hedge.' However, this week's price action was influenced by a tug-of-war between relief from lower oil prices and tighter US monetary policy. The Fed raised interest rates by a quarter point to a 3.75%-4% range and signaled it may not be done, while the US dollar climbed to a more than seven-week high.

According to EverBank, traders who had bet against gold ahead of the rate decision have been forced to unwind their 'short' positions, and the metal is now testing a closely watched resistance zone around $4,400-$4,440. This zone is significant because it's where many orders tend to cluster, not just forecasts.