Gold Prices Extend Weekly Gains Amid U.S.-Iran Uncertainty
Gold prices remained on track for a weekly increase on Friday, supported by fragile geopolitical developments between the U.S. and Iran. However, investor sentiment stayed cautious ahead of key diplomatic talks expected over the weekend.
Spot gold edged up 0.2% to $4,775.77 per ounce as of 10:04 ET (14:04 GMT), while U.S. gold futures slipped 0.3% to $4,802.65 per ounce. Overall, bullion is set to gain approximately 2.2% for the week, marking its third consecutive weekly advance.
Market Focus Shifts to U.S.-Iran Talks
Markets are closely watching the evolving situation between the United States and Iran. U.S. President Donald Trump recently announced a two-week ceasefire, which initially helped stabilize global sentiment. However, the agreement remains fragile.
Ongoing Israeli military operations targeting Iran-aligned Hezbollah forces in Lebanon have raised concerns about the durability of the ceasefire. Additional strikes reported on Friday have further complicated the outlook, casting doubt over the planned discussions between U.S. and Iranian officials in Pakistan.
Reports suggest disagreements between Washington and Tehran regarding whether Lebanon is included in the ceasefire terms. Iranian sources have also denied that any delegation has arrived in Islamabad, stating that talks will remain suspended as long as Israeli attacks continue.
At the same time, the Strait of Hormuz—vital for global oil shipments—remains largely restricted, adding further tension to energy markets. President Trump has criticized Iran for failing to ensure the smooth flow of oil supplies.
Oil Prices, Inflation, and Gold Dynamics
Oil prices, which had recently surged close to $120 per barrel, declined this week but remain elevated after weeks above $100. High energy costs continue to fuel global inflation concerns.
Rising inflation expectations have increased speculation that central banks may keep interest rates higher for longer. This environment typically weighs on gold, as higher rates reduce the appeal of non-yielding assets.
Despite gold’s traditional role as a safe-haven asset, investors have recently favored the U.S. dollar. A stronger dollar makes gold more expensive for international buyers, limiting its upside. However, the dollar has weakened by more than 1% over the past week, offering some support to gold prices.
U.S. Inflation Data Signals Mixed Outlook
Recent U.S. inflation data showed a sharp acceleration in consumer prices during March, largely driven by higher energy costs linked to the Iran conflict.
On an annual basis, the consumer price index (CPI) rose 3.3%, up from 2.4% in February and close to market expectations. This marks the highest level since June 2022.
Month-over-month, inflation increased by 0.9%, significantly higher than the previous month’s 0.3% rise. Energy prices were a major contributor, surging 12.5% annually compared to just 0.5% in February.
However, core inflation—which excludes volatile food and energy prices—remained more subdued. Core CPI rose 2.6% year-on-year and 0.2% month-on-month, both below expectations.
Federal Reserve Outlook Remains Uncertain
The softer core inflation reading suggests that underlying price pressures may still be contained. As a result, analysts believe the Federal Reserve may not place excessive weight on the latest CPI data when making future interest rate decisions.
With geopolitical risks, inflation trends, and central bank policy all in play, gold markets are likely to remain volatile in the near term.
