Gadolinium oxyhydride GdHO is a photochromic material that darkens under illumination and bleaches back by thermal relaxation. As an inorganic photochromic material that can be easily deposited by magnetron sputtering, GdHO has very interesting potential applications as a functional material, specially for smart glazing applications. However, the underlying reasons behind the photochromic mechanism - which can be instrumental for the correct optimisation of GdHO for different applications - are not completely understood. In this paper, we rely on the well-established magnetic properties of Gd3+ to shed light on this matter. GdHO thin films present paramagnetic behaviour similar to other Gd3+ compounds such as Gd2O3. Illumination of the films result in a reversible increase of the Curie-Weiss temperature pointing to Ruderman-Kittel-Kasuya-Yosida RKKY interactions, which is consistent with the resistivity decrease observed in the photodarkened films.