Gold Recovers to One-Week High as Easing Oil Prices Offset Hawkish Fed

The main driver was the decline in oil prices. Oil fell for a third consecutive session as concerns over disruptions to Saudi supply eased, even though the wider Middle East conflict remained a source of uncertainty.

This was particularly important because the Federal Reserve had raised interest rates on Wednesday and signalled that additional increases could still be needed. Higher interest rates normally weigh on gold because they make yield-bearing assets more attractive. However, the decline in oil prices allowed investors to look beyond the Fed's hawkish message and focus instead on the possibility that the tightening cycle may remain relatively limited.

The broader central-bank picture remained restrictive. The Bank of Japan raised interest rates to a 31-year high and indicated that it remained prepared to increase borrowing costs further if inflation pressures persisted. This reinforces the broader trend of major central banks remaining focused on inflation, even as gold responds to changes in the expected pace of future tightening.

Gold also received support from the broader precious-metals market. Silver, platinum and palladium all advanced during the session, with all four major precious metals heading toward weekly gains.