Gold Edges Higher but Heads for Weekly Loss
Gold prices moved slightly higher on Friday but remained on track for a weekly decline, as stalled U.S.-Iran peace negotiations triggered a surge in oil prices. This has reignited concerns about rising inflation and the possibility of interest rates staying elevated for longer.
By 08:31 ET (12:31 GMT), spot gold increased by 0.3% to $4,707.43 per ounce, while gold futures held relatively steady at $4,724.11 per ounce.
Weekly Performance Shows Downward Pressure
Despite the modest daily gain, gold has struggled over the past week. Spot prices have fallen approximately 2.6%, while futures have dropped around 3.2%, reflecting sustained pressure from macroeconomic factors.
Oil Prices and Geopolitics Drive Inflation Concerns
Oil markets remain a key driver behind gold’s weakness. Although prices eased slightly on Friday, crude remained above $100 per barrel. Ongoing tensions between the U.S. and Iran have increased fears of prolonged supply disruptions.
Donald Trump recently stated there is no urgency to end the conflict, further fueling uncertainty. Both global and U.S. oil benchmarks are now on track for their strongest weekly gains since early March.
Higher Interest Rates Weigh on Gold
Rising oil prices have intensified concerns that inflation could accelerate again, potentially forcing central banks to consider further interest rate hikes. This environment typically weighs on non-yielding assets like gold, which becomes less attractive compared to interest-bearing investments.
Analysts Warn of Broader Inflation Pressures
According to ING, uncertainty surrounding the next phase of the Middle East conflict remains high. Analysts noted that inflationary pressures may be spreading more broadly across the global economy.
Stronger Dollar Adds Additional Pressure
At the same time, the U.S. dollar has seen modest strength this week, adding another headwind for gold. A firmer dollar tends to reduce demand for dollar-denominated commodities among international buyers, limiting upside potential for gold prices.
