Gold Continues to Rise Supported by Oil Decline and Weak Dollar

Oil prices fell for the third consecutive day, while the dollar remained weak after falling from its recent highs. A weak dollar reduces the cost of commodities priced in it for holders of other currencies.

Ahmed Asiri, a research expert at Pepperstone, said the relationship between gold and oil could weaken if oil prices experience a sharp correction that calms inflation and interest rate hike expectations, or if severe escalation leads the world to face a recession, or if a state of ignoring financial risks overshadows the scene by turning a blind eye to the impact of the interest rate path.

The Federal Reserve raised interest rates on Wednesday and hinted at further increases in the coming months.

Goldman Sachs maintained its forecast for the gold price at $5400 by the end of 2027, despite the U.S. central bank raising interest rates. It said that monetary policy tightening is likely to slow the rise of the precious metal but not hinder it.

Although gold is usually seen as a hedge against inflation, high interest rates can limit demand for it as they increase the attractiveness of interest-bearing assets.

The Bank of Japan raised interest rates to their highest level in 31 years and indicated its readiness to continue raising borrowing costs. In contrast, the Bank of England kept interest rates unchanged on Thursday but warned of the possibility of needing to raise them.

As for other precious metals, silver rose 2.3% to $66.66 per ounce in spot transactions and is heading for weekly gains.

Platinum rose 2.3% to $1810.25, while palladium increased 2.1% to $1318.50.