Gold prices moved higher in Asian trading on Friday, but the precious metal remained on track for its second consecutive weekly decline as investors weighed the inflationary impact of the U.S.-Israel conflict with Iran.
Concerns that rising energy prices could push global inflation higher have limited gold’s upside, even though geopolitical tensions typically increase demand for safe-haven assets.
Gold Gains Slightly as Dollar and Oil Pause
Gold saw modest support during Friday’s session after the U.S. dollar and oil prices paused their recent rally. Additional relief came after the United States announced new waivers allowing the purchase of certain Russian crude supplies, aiming to reduce energy supply disruptions linked to Iran.
By 01:14 ET (05:14 GMT):
- Spot gold rose 0.6% to $5,109.46 per ounce
- Gold futures slipped 0.3% to $5,111.84 per ounce
Gold Set for Second Weekly Loss
Despite Friday’s gains, spot gold was expected to fall roughly 1.2% for the week, marking the second straight weekly decline.
Although the worsening geopolitical situation in the Middle East has generated some safe-haven demand, this support has largely been offset by fears that inflation will remain elevated.
Markets worry that the Iran conflict could keep oil prices higher for an extended period, increasing inflationary pressure worldwide. In response, major central banks may maintain tight monetary policies, which typically weigh on gold prices.
Interest Rate Expectations Weigh on Gold
The prospect of persistent inflation has reduced expectations for near-term interest rate cuts by the U.S. Federal Reserve. Investors widely expect the Fed to keep interest rates unchanged at its upcoming policy meeting next week.
Since the start of the Iran war, gold has largely traded within a $5,000 to $5,200 per ounce range. While the metal is still higher on a year-to-date basis, its momentum has slowed following a sharp decline from a record high near $5,600 per ounce reached in late January.
Analysts at ANZ noted that despite facing several short-term challenges, gold remains an important portfolio diversifier that helps investors hedge against macroeconomic uncertainty and geopolitical risk.
Other Precious Metals See Modest Gains
Other precious metals also posted small increases on Friday, though their performance for the week remained relatively muted.
- Spot silver rose 0.7% to $84.33 per ounce
- Spot platinum gained 0.5% to $2,143.21 per ounce
Markets Await Key U.S. Inflation Data
Investors are now closely watching the upcoming release of the U.S. Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation indicator.
The data could provide further insight into inflation trends in the world’s largest economy and influence expectations for future monetary policy.
However, the report reflects January price data, meaning it may not yet capture the impact of rising energy costs driven by the Iran conflict.
The PCE figures will be released just days before the Federal Reserve’s next policy meeting, where policymakers are widely expected to keep interest rates unchanged.
According to CME FedWatch, markets currently anticipate no rate cuts until at least September.
