Spot gold was up 0.3% at $4,355.05 per ounce by 0423
GMT. US gold futures were down 0.1% at $4,394.10.
Oil prices fell for a third straight day, while the dollar
remained subdued after retreating from recent highs. A weaker
dollar makes greenback-priced commodities less expensive for
holders of other currencies.
The link between gold and oil could weaken if oil corrects
sharply, easing inflation and rate-hike expectations, or if
extreme escalation forces the world to counter recession, or if
fiscal recklessness dominates the horizon over the rate channel,
said Ahmad Assiri, research strategist at Pepperstone.
The Federal Reserve raised interest rates on Wednesday and
flagged more hikes in the coming months.
Goldman Sachs kept its end-2027 gold price forecast at
$5,400 despite the Fed rate increase, saying tighter policy is
likely to slow bullion’s rally but not derail it.
Although gold is traditionally viewed as a hedge against
inflation, higher rates can curb its demand by increasing the
appeal of yield-bearing assets.
The Bank of Japan raised interest rates to a 31-year high
and signalled its readiness to keep pushing up borrowing costs.
The Bank of England kept interest rates on hold on Thursday but
warned they might have to go up.
“This high-rates environment, in my view, caps near-term
gold upside… However, if rising yields stem from deteriorating
fiscal confidence, war-related spending and wider deficits, as
opposed to rate expectations, a weaker dollar could accompany
higher yields, possibly turning the relationship supportive for
gold,” Assiri said.
Spot silver rose 1.1% to $65.91 and was headed for a
weekly gain.
Platinum gained 1.4% to $1,793.15 and palladium
added 1% at $1,303.74.