Gold Rises as Oil and Treasury Yields Ease Inflation Fears

Gold prices moved higher on Friday as easing oil prices helped reduce concerns about another wave of energy-driven inflation. Spot gold was around $4,361 an ounce, while gold futures traded near $4,400, according to Investing.com.

The precious metal had faced pressure earlier in the week after the U.S. Federal Reserve raised its benchmark interest rate by 25 basis points to 3.75%-4%. Higher interest rates generally weigh on gold because the metal does not generate interest income, making it relatively less attractive compared with yield-bearing assets.

However, the decline in Treasury yields after their initial post-Fed surge provided some relief for bullion. The softer yields, combined with a relatively stable dollar, helped gold recover much of its earlier losses.

Oil prices declined for a third consecutive session as concerns over supply disruptions in the Middle East eased. Saudi Arabia indicated that flows through a key pipeline could be restored within days, while oil shipments through the Strait of Hormuz continued to provide some relief to markets.

Lower crude prices are important for gold because they can reduce expectations for energy-driven inflation. With inflation pressures potentially easing, investors may become less concerned about aggressive monetary tightening.

Despite the recovery, gold still faces uncertainty from U.S. monetary policy. Federal Reserve officials have indicated that inflation remains a concern, while markets continue to assess the possibility of additional rate increases.

Investors are also watching gold-backed exchange-traded funds, where holdings have continued to rise, suggesting that some investors remain interested in bullion despite the higher-rate environment.

For markets, the direction of oil prices, Treasury yields, the U.S. dollar and future Fed policy will remain key factors influencing gold prices in the coming sessions.