Gold Climbs to One-Week High as Falling Oil Prices Support Precious Metals

Gold prices moved higher again on Friday, touching a one-week peak as investors followed developments in the Middle East and a decline in crude oil prices.

Spot gold increased 0.9% to $4,378.19 per ounce by 0829 GMT, while U.S. gold futures gained 0.4% to $4,418.20.

The advance came as oil prices declined for a third consecutive session. Fears of possible disruptions to Saudi supply have eased, reducing some immediate pressure from energy markets even as fighting and geopolitical uncertainty persist across the region.

Gold has traditionally drawn investor demand as a hedge against inflation and geopolitical uncertainty. Higher interest rates, however, can weigh on demand for gold and other non-yielding assets because interest-bearing investments can provide greater returns.

The U.S. Federal Reserve raised interest rates on Wednesday and signaled that further increases could be possible. Gold nevertheless continued to gain despite the more restrictive outlook for monetary policy.

Han Tan, chief market analyst at Bybit, said gold had absorbed the Federal Reserve’s more hawkish signals while benefiting from lower oil prices and expectations that the rate-hiking cycle could remain relatively shallow.

Goldman Sachs kept its end-2027 gold forecast unchanged at $5,400 an ounce. The bank said tighter monetary policy could mainly slow gold’s appreciation in the near term rather than lower its eventual price.

The Bank of Japan also increased interest rates to a 31-year high and indicated that it was prepared to continue raising borrowing costs as major central banks respond to persistent inflation pressures.

Gold’s future direction is expected to remain closely tied to the Middle East conflict and energy prices. Hamad Hussain, a climate and commodities economist at Capital Economics, said an extended conflict alongside persistently high oil prices could lead central banks to raise interest rates more aggressively than markets currently anticipate.

Other precious metals also posted gains. Spot silver climbed 2.7% to $66.92 an ounce, platinum rose 2.5% to $1,813.70, and palladium advanced 2.6% to $1,324.12. All three metals were on course to finish the week higher.