Gold Prices Edge Lower as Iran Conflict, Fed Outlook Cap Weekly Moves

Gold Eases, Heads for Slight Weekly Loss

Spot gold fell 0.4% to $4,526.50 an ounce by 01:24 ET (05:24 GMT) on Friday, while gold futures declined 0.4% to $4,528.37 per ounce. Spot prices were on track to lose about 0.2% for the week after recording sharp intraday swings driven by conflicting reports on U.S.-Iran talks.

U.S. President Donald Trump’s decision to postpone a military strike against Iran, along with reports that a final draft of a peace deal had been reached, initially supported expectations for a potential easing of the conflict. However, sentiment remained fragile after Trump warned that he could strike Iran soon if Tehran did not agree to a deal, with Iran’s nuclear activities identified as a central point of dispute.

Reports indicated that Iran largely rejected U.S. demands to hand over its enriched uranium. U.S. officials also criticized Tehran’s plans to charge for transit through the Strait of Hormuz. Oil flows through the channel remained limited, helping to keep crude prices elevated and sustaining concerns about ongoing supply disruptions.

Inflation, Fed Rate Outlook Pressure Precious Metals

The continued conflict and constrained oil flows contributed to higher crude prices, which fed through into U.S. inflation. Inflation in the United States surged over the past two months on the back of higher oil prices, intensifying speculation that the Federal Reserve may be forced to raise interest rates this year.

Minutes from the Fed’s late-April meeting, released this week, showed that an increasing number of policymakers supported the prospect of rate hikes. Higher interest rates generally weigh on gold and other non-yielding assets by increasing the opportunity cost of holding them.

Analysts at OCBC noted that gold prices were being pulled between opposing forces: lower yields and oil prices provide support, but any renewed spike in crude quickly revives concerns over inflation and potential Fed tightening. They added that, for now, the near-term bias for gold is less bearish than earlier in the week, although upside appears limited unless both oil prices and yields decline more decisively.

A recent spike in bond yields, especially U.S. Treasuries, had unsettled metal markets in previous weeks. While yields retreated from their recent highs during the current week, they remained relatively elevated, limiting support for gold.

Other precious metals also weakened on Friday and were set for subdued weekly performances. Spot platinum slipped 0.5% to $1,961.44 per ounce, while spot silver dropped 0.3% to $76.825 per ounce.

FAQ

Why did gold prices fall on Friday?
Gold prices declined mainly due to ongoing uncertainty over the Iran conflict, its impact on oil prices and inflation, and rising expectations that the Federal Reserve could raise interest rates, all of which pressured non-yielding assets.

How did gold perform over the week?
Spot gold was set to lose about 0.2% for the week, after experiencing sharp price swings driven by mixed signals from U.S.-Iran negotiations and evolving views on U.S. monetary policy.

What role did the Federal Reserve play in market sentiment?
Minutes from the Fed’s late-April meeting showed growing support among policymakers for potential interest rate hikes, a development viewed as negative for gold and other non-yielding assets.

How did other precious metals trade?
Spot platinum fell 0.5% to $1,961.44 per ounce, and spot silver declined 0.3% to $76.825 per ounce, with both metals also heading for muted weekly performances.