Gold Rebounds in Asia as Middle East Tensions and U.S. CPI Data Take Center Stage
Gold prices moved higher in Asian trading on Friday after dropping below key levels in the previous session. Ongoing uncertainty about U.S. interest rates, rising tensions in the Middle East, and upcoming U.S. inflation data kept investors cautious.
Silver also recovered after plunging nearly 10% in the prior session. However, precious metals remain volatile following sharp price swings over the past week.
Safe Haven Demand Returns as Iran Tensions Escalate
Gold benefited from renewed safe-haven demand after reports indicated that Washington plans to deploy a second aircraft carrier, the USS Gerald R. Ford, to the Middle East. The move comes as nuclear negotiations with Iran face setbacks.
Spot gold gained 0.5% to $4,953.58 per ounce by 01:08 ET (06:08 GMT), while April gold futures rose 0.5% to $4,972.70 per ounce.
This rebound followed a sharp drop of more than 3% in the previous session.
Spot silver climbed 1.6% to $76.4855 per ounce. Platinum also recovered, moving back above $2,000 per ounce after heavy losses earlier in the week.
U.S. Interest Rate Uncertainty Weighs on Metals
Concerns about the Federal Reserve’s next move remain a key factor influencing gold prices. Strong U.S. payrolls data earlier this week showed resilience in the labor market, which reduced expectations for near-term interest rate cuts.
The U.S. dollar strengthened after the nonfarm payrolls report, putting additional pressure on precious metals.
Higher interest rates tend to weigh on non-yielding assets such as gold. A stronger dollar can also make bullion more expensive for overseas buyers.
All Eyes on U.S. CPI Inflation Data
Markets are now focused on the January U.S. Consumer Price Index (CPI) report, which is expected to provide fresh insight into inflation trends and Federal Reserve policy.
Both labor market strength and inflation data are critical inputs for the Fed’s interest rate decisions.
While economists expect headline and core CPI to show some cooling in January, recent history suggests that inflation data has often surprised to the upside. A higher-than-expected reading could reduce the likelihood of rate cuts, potentially limiting gains in gold.
Precious Metals Struggle for Direction
Despite Friday’s rebound, gold and other precious metals remain on track for a relatively muted week.
The recent pullback from record highs was initially triggered after President Donald Trump nominated Kevin Warsh as the next Federal Reserve Chairman. Warsh is widely viewed as less dovish on monetary policy, which fueled speculation about fewer rate cuts.
Stronger-than-expected U.S. employment data and sharp volatility across the metals market have further reduced gold’s short-term momentum.
Investors now await clarity from inflation data and geopolitical developments to determine the next direction for gold prices.
