Gold prices were little changed on Friday and remained on course for a weekly decline of more than 3%.
Persistent concerns over high energy prices, rising U.S. Treasury yields and expectations for further Federal Reserve rate hikes continued to weigh on the precious metal.
At 23:41 ET, spot gold traded near $4,274.89 an ounce, while gold futures gained 0.3% to $4,309.72.
Silver slipped 0.1% to $63.79, while platinum also fell 0.1% to $1,754.17.
Meanwhile, the U.S. Dollar Index rose 0.1% to 101.29.
Strait of Hormuz Keeps Oil and Inflation Risks in Focus
Oil prices stabilized after a sharp rally on Thursday as uncertainty continued around negotiations between the United States and Iran.
The two sides remained divided over reopening the Strait of Hormuz, one of the world’s most important energy shipping routes.
Negotiators were reportedly discussing a phased agreement that could allow Iran to reopen the waterway while the United States lifts restrictions affecting Iranian ports.
The risk of prolonged disruption has kept crude prices elevated and increased concerns that higher energy costs could slow progress in bringing inflation down.
Higher Energy Prices Could Influence Fed Policy
Rising oil prices have become increasingly important for the gold market because they could strengthen inflation pressures.
Investors are now assessing whether higher fuel and energy costs could force the Federal Reserve to maintain a tighter monetary policy stance.
The Fed raised interest rates last week for the first time in three years, increasing concerns that further hikes could follow if inflation remains persistent.
Higher interest rates generally reduce the appeal of gold because the metal does not provide interest or dividend income.
Treasury Yields Add Pressure on Gold
U.S. Treasury yields also moved sharply higher on Thursday.
The 30-year Treasury yield approached 5.5%, reaching its highest level in more than two decades.
Higher bond yields make interest-bearing assets more attractive compared with gold and other non-yielding investments.
They also increase concerns that borrowing costs could remain elevated for an extended period.
Stronger Dollar Limits Gold’s Upside
The U.S. dollar has provided another headwind for gold prices.
A stronger dollar typically makes gold more expensive for buyers using other currencies, which can reduce international demand.
With both Treasury yields and the dollar remaining firm, gold has struggled to regain momentum despite ongoing geopolitical uncertainty.
Gold Investment Demand Remains Resilient
Despite the recent pullback, investor demand for gold has remained relatively stable.
ANZ analysts said there has been no significant liquidation of gold investment positions, even as the macroeconomic environment has become more challenging.
This suggests that the latest decline has not yet triggered a broad exit from the precious metal.
Gold Outlook Depends on Oil, Yields and the Fed
The near-term outlook for gold remains closely linked to developments in energy markets, U.S. Treasury yields and Federal Reserve policy expectations.
A further increase in oil prices could keep inflation concerns elevated and strengthen the case for tighter monetary policy.
At the same time, higher bond yields and a stronger U.S. dollar could continue to limit gold’s upside.
For now, gold remains under pressure as investors balance geopolitical risks against the possibility of further Federal Reserve rate hikes.
