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Global gold prices closed higher at the end of yesterday's trading, climbing to their highest level in a week and heading for their first weekly gain in four weeks. The rally was driven by a drop in oil prices, which eased concerns about long-term inflationary pressures, according to Reuters.

Gold Ounce Price

At the close, spot gold prices rose by 1.2% to $4,390.11 per ounce, after hitting their highest level since September 11 earlier in the session.

Global Gold Prices

US gold futures advanced 0.6% to settle at $4,424.90. The precious metal recorded a 1% gain over the past week.

Chris Gaffney, President of World Markets at EverBank, said: "The drop in oil prices reduces inflationary pressures, as oil has been the main driver of headline inflation. Precious metals investors were anticipating a US rate hike and heavily built short positions to capitalize on expected gold sell-offs, but these positions were quickly liquidated."

Gaffney added: "Gold is currently testing a resistance level between $4,400 and $4,440, and breaking above this level could pave the way for further increases in gold prices."

Meanwhile, the dollar rose to its highest level in over seven weeks, making the greenback-priced gold more expensive for holders of other currencies.

The US Federal Reserve raised interest rates by a quarter of a percentage point to a range of 3.75% to 4% on Wednesday and signaled the possibility of further increases in the coming months.

Traders are now pricing in a 55% probability of another US rate hike at the central bank's next policy meeting in October, according to the CME Group's FedWatch Tool.

Although gold is traditionally viewed as an inflation hedge, higher interest rates dim the appeal of the non-yielding metal by making yield-bearing assets more attractive to investors.

Other Precious Metals

Spot silver rose 2.3% to $66.70, platinum advanced 2.2% to $1,812.50, and palladium gained 1.5% to reach $1,310.20.