LONDON — Gold prices edged higher on Friday, recovering from earlier losses as oil prices fell back below $100 a barrel, while investors closely monitored developments in the Middle East for fresh signals on energy-driven inflation risks and the outlook for U.S. interest rates.
Spot gold rose 0.2% to $4,055.38 per ounce by 0925 GMT, after falling 2% on Thursday to $4,047.26. U.S. August gold futures also gained 0.2% to $4,058.10 per ounce.
Brent crude had surged more than 7% on Thursday, climbing above $100 a barrel for the first time since May after U.S. President Donald Trump threatened Iran and its Houthi allies with “severe military punishment” following a Houthi attack on two Saudi oil tankers in the Red Sea.
Oil prices, however, retreated below the $100 mark on Friday.
Higher oil prices driven by supply disruptions in the Gulf tend to weigh on gold by reinforcing expectations that interest rates will remain elevated for longer, reducing the appeal of the non-yielding precious metal.
Investors are now awaiting next week’s Federal Reserve policy meeting, where the U.S. central bank is widely expected to leave interest rates unchanged.
According to the CME FedWatch Tool, traders are pricing in an 81% probability of an interest rate increase in September.
The European Central Bank also left interest rates unchanged on Thursday, as expected, while signaling that a rate hike in September remains possible.
Among other precious metals, spot silver rose 1.2% to $58.36 per ounce, platinum gained 0.2% to $1,603.49, while palladium fell 0.4% to $1,251.65 per ounce.
Reuters
