Gold prices moved higher on Friday but remained on course for a weekly decline as investors assessed the US dollar, Treasury yields and expectations for further Federal Reserve interest-rate increases.
At 04:59 ET, spot gold was up 0.5% at $4,293.56 an ounce, while gold futures gained 0.7% to $4,329.97 an ounce.
The US dollar index, which measures the currency against a basket of peers, declined 0.2% to 101.11. However, the index was up 0.9% over the previous week.
A stronger US dollar can affect demand for dollar-denominated gold by increasing its cost for buyers using other currencies.
Oil Prices and Inflation Outlook Remain in Focus
Oil prices declined on Friday following gains in the previous session, as markets assessed reports of negotiations involving the United States and Iran.
According to the reports, negotiators were exploring a phased agreement under which Iran would reopen the Strait of Hormuz in exchange for the lifting of a US naval blockade.
No final agreement was reported as having been reached.
Developments affecting energy flows have contributed to elevated oil prices, while investors have been assessing the potential implications of higher fuel costs for inflation.
The Federal Reserve raised interest rates the previous week, its first increase in three years. Markets are now considering whether energy-related inflation pressures could affect the central bank’s future policy decisions.
Treasury Yields Rise
US Treasury yields increased on Thursday, with the 30-year yield approaching its highest level in more than two decades.
Higher interest rates and government bond yields can reduce the relative appeal of gold because the metal does not generate interest income.
Expectations for the Federal Reserve’s next policy steps have therefore remained among the factors influencing precious metals markets.
ANZ Says Investment Demand Has Remained Resilient
ANZ analysts said investment demand for gold had remained resilient despite changes in the broader macroeconomic environment.
According to the analysts, there had been no material liquidation of gold positions so far.
The near-term performance of gold continues to be monitored alongside movements in oil prices, Treasury yields, the US dollar and expectations for Federal Reserve monetary policy.