Gold prices moved higher on Friday as bargain hunters returned after the previous session’s sharp decline.
However, the precious metal remained on course for its largest weekly loss since early June. Escalating tensions between the United States and Iran continued to support oil prices and raise concerns about renewed inflation.
Gold Prices Rebound Toward $4,000
At 03:12 ET, spot gold rose 0.47% to approximately $3,995.35 per ounce.
Gold futures gained 0.18% to around $3,999.22 per ounce, keeping prices close to the psychologically important $4,000 level.
Meanwhile, silver slipped 0.18% to $55.43 per ounce. Platinum fell about 2% to $1,589.57.
Gold Heads for Biggest Weekly Loss Since June
Despite Friday’s recovery, gold remained down approximately 3% for the week.
The metal was therefore heading for its steepest weekly decline since early June.
Investors continued to favour the US dollar, government bonds and other yield-bearing assets. This reduced demand for gold, which does not generate interest or income.
US-Iran Conflict Raises Energy Price Risks
The latest decline followed another round of US strikes on Iranian targets on Thursday.
The attacks came one day after an oil tanker was damaged near Iran’s main export terminal.
The renewed hostilities extended the Middle East conflict into a fifth month and kept crude oil prices elevated.
Higher energy prices have increased concerns that inflation could accelerate again, even after recent US data showed some improvement in underlying price pressures.
Rising Oil Prices Complicate the Fed Outlook
Expensive oil could make the Federal Reserve’s policy decisions more difficult.
Higher fuel and transportation costs may keep inflation above the central bank’s target for longer. As a result, policymakers could maintain restrictive interest rates rather than move quickly toward monetary easing.
Higher interest rates generally support Treasury yields and the US dollar. They also make non-yielding assets such as gold less attractive to investors.
Markets Look Beyond Softer Inflation Data
US consumer and producer inflation figures released this week indicated that underlying price pressures were easing.
However, markets largely overlooked those backward-looking reports.
Investors are now more focused on whether rising energy costs will reverse the recent disinflation trend and prevent inflation from moving sustainably toward the Federal Reserve’s 2% target.
Federal Reserve Officials Remain Cautious
Federal Reserve officials continued to warn that inflation risks had not disappeared.
Policymakers indicated that they would need to see sustained evidence of lower price pressures before considering any reduction in interest rates.
Their cautious message has kept investors alert to developments that could push inflation higher, particularly rising oil prices and geopolitical supply disruptions.
Technical Outlook for Gold Remains Fragile
Tony Sycamore, senior market analyst at IG, said gold’s limited reaction to softer-than-expected US consumer and producer inflation data was not especially encouraging for the short-term outlook.
He said the latest decline would test the view that gold had established support near its late-June low of approximately $3,942 per ounce.
A decisive fall below that level could expose the October 2025 low near $3,886.
However, a recovery above downtrend resistance around $4,140 could improve the technical picture.
Stronger Dollar Pressures Gold
Gold has traded close to $4,000 per ounce during recent weeks, but a stronger dollar has limited its upside.
Risk-averse investors have also favoured the dollar because of its safe-haven status and relatively attractive yield.
For gold to regain stronger momentum, investors may need clearer evidence that inflation is cooling and that the Federal Reserve is moving closer to lowering interest rates.
Until then, bullion may remain sensitive to movements in oil prices, Treasury yields, the dollar and the US-Iran conflict.
