Precious Metals Review

“Gold prices climbed ​to a one-week high on Friday, and were on track for their first weekly gain ‌in four, as lower oil prices eased concerns about prolonged inflationary pressures, though a stronger dollar limited gains.

Spot gold was up 0.7% at $4,372.27 per ounce by 09:16 a.m. EDT (1316 GMT), after hitting its highest level since September ​11 earlier in the session. Bullion has gained 0.6% so far this week.

US gold ​futures rose 0.3% to $4,411.20.

“Easing of oil prices reduces inflation pressures as oil has ⁠been the main driver of overall inflation… Precious metal investors had expected a (US) rate hike and ​piled into short positions to take advantage of the expected selloff in gold. These positions have been ​rapidly unwound,” said Chris Gaffney, president of world markets at EverBank.

Brent crude oil prices extended losses for a third straight session as easing concerns over Saudi supply disruptions outweighed anxiety about a widening of conflict across ​the Middle East.

Lower oil prices offered some relief from inflation worries, but the risk of a Middle East supply ​shock remains a key concern.

The dollar rose to a more than seven-week high, making greenback-priced bullion expensive for holders ‌of ⁠other currencies.

The Federal Reserve raised interest rates by a quarter of a percentage point to the 3.75%-4% range on Wednesday and flagged more hikes in the coming months.

Traders now see a 58% chance of another US rate hike when the central bankers meet next in October, according to the ​CME FedWatch tool. 

Although gold ​is traditionally seen as a ⁠hedge against inflation, higher rates can make it less attractive by increasing the appeal of yield-bearing assets.

Additionally, the Bank of Japan raised interest rates to a ​31-year high and signalled its readiness to keep pushing up borrowing costs.

Meanwhile, ​gold demand ⁠in India was subdued this week as buyers held back purchases in anticipation of lower prices, while premiums in China remained steady, supported by robust investment demand.

“Gold is currently testing resistance near the $4,400 to $4,440 range ⁠and a ​move above this resistance level could clear a path ​higher for gold prices,” said Gaffney.

Spot silver rose 2.3% to $66.69, platinum gained 1.7% to $1,799.69 and palladium added 1.9% at $1,315.20. All ​metals were headed for a weekly gain.”

“Gold prices rise above the $4,400-an-ounce mark, supported by lower Treasury yields and easing oil prices. “Gold’s resilience is notable given that the Fed has just begun a new hiking cycle and the dollar remains relatively firm, suggesting continued demand from investors less sensitive to the traditional rates-and-dollar relationship,” analysts at Saxo Bank say. In early European trading, New York gold futures are up 0.8% to $4,434.90 a troy ounce, on track for a modest weekly gain. Still, the prospect of further interest-rate hikes this year continues to weigh on the precious metal, as higher rates typically increase gold’s opportunity cost and strengthen the dollar.”