Gold edged higher on Friday as a weaker dollar and a third straight drop in oil prices offset pressure from the Federal Reserve's first rate hike in over three years. Spot gold rose 0.9% to $4,379.59/oz, while gold futures added 0.4% to $4,417.84/oz, capping a week of modest gains for the metal. Treasury yields kept climbing and oil extended its slide on easing Middle East supply fears.
Gold ticked up slightly on Friday, helped by a weaker dollar and an extended decline in oil, even as the Federal Reserve's rate hike earlier in the week kept pressure on bullion. At 16:40 ET (20:40 GMT), spot gold rose 0.9% to $4,379.59/oz, while gold futures added 0.4% to $4,417.84/oz. The contracts had gained 0.8% and 0.2%, respectively, for the week.
Fed's Hawkish Hike Pressures Bullion
The Federal Open Market Committee on Wednesday unanimously voted to raise the federal funds rate to 3.75%-4.00% from 3.50%-3.75%, a move markets had priced in at 90% odds ahead of the decision. Fed Chair Kevin Warsh's post-decision press conference and the central bank's updated economic projections were decidedly hawkish, and gold touched near a six-week low on Wednesday as a result. Higher rates tend to weigh on non-yielding assets such as gold and can strengthen the dollar, making bullion pricier for foreign buyers.
Fixed-income investors cheered the increase as evidence the Fed was not falling behind on inflation, and Treasury yields rallied Thursday before resuming their climb. The benchmark 10-year yield rose 5.5 basis points to 5.002% on Friday, having soared to an over 19-year high earlier in the week. The Fed's updated dot plot also pushed out its projection for inflation reaching the 2% target to 2029.
Oil's Third Straight Drop Eases Pressure
Oil prices fell Friday for a third straight session, pressured by signs of diplomatic progress between the U.S. and Iran and easing supply fears tied to a Saudi Arabian pipeline outage. The East-West Pipeline was damaged earlier in the week by attacks from Iran-backed Houthis in Yemen, and up to 4% of global oil supply could have been lost had it failed to restart, according to Reuters.
Hopes have since risen that Saudi Arabia could partially restore the pipeline's flows. Bloomberg News reported the kingdom is seeking to restore about half of the pipeline's capacity within days, sooner than earlier reports that it could take weeks to come back online. Riyadh has also offered additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman's Sohar port, easing some concerns over lost export volumes, according to Reuters.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
