Spot gold fell 0.8% to $4,440.84 an ounce by 23:45 ET (03:45 GMT), while gold futures declined 0.8% to $4,467.01 per ounce. Spot prices were on track to lose about 2.2% for the week, marking their worst weekly decline since early May.<\/p>\n
The metal came under pressure as worsening geopolitical tensions in the Middle East drove expectations of higher inflation and interest rates, prompting flows into the dollar. Signs of a prolonged U.S.-Iran conflict are expected to underpin oil prices and inflation, reinforcing concerns that global central banks, particularly the Federal Reserve, may adopt a more hawkish stance.<\/p>\n
According to the report, expectations of higher interest rates have weighed on gold since the onset of the U.S.-Israel war on Iran in late February, as elevated rates tend to reduce the appeal of non-yielding assets such as bullion.<\/p>\n
Geopolitical risk increased after the U.S. and Iran exchanged a fresh round of attacks and reports indicated that Tehran had stepped away from negotiations. Prospects for a broader peace deal weakened further when Iran-backed Lebanese group Hezbollah rejected a ceasefire with Israel, while hostilities in Southern Lebanon continued. Tehran had previously outlined a Lebanon ceasefire as a condition for any wider agreement.<\/p>\n
Market participants also turned their attention to U.S. nonfarm payrolls data for May, due later on Friday. The release is widely expected to provide additional insight into the labor market and the future course of interest rates. The data is anticipated to show further cooling in U.S. jobs growth amid headwinds from the Iran war and slowing economic momentum.<\/p>\n
Labor market conditions and inflation are the Federal Reserve\u2019s two main considerations for adjusting interest rates. The upcoming payrolls report arrives amid growing conviction that the Fed will keep rates steady for longer in response to inflationary pressures linked to the Iran war. A strong payrolls reading could give the central bank more scope to leave rates unchanged or potentially raise rates later in the year. Nonfarm payrolls have exceeded expectations in four of the past six months.<\/p>\n
Other precious metals also declined on Friday and were set for weekly losses. Spot silver fell 1.7% to $72.6320 per ounce and was down 3.5% for the week. Spot platinum slipped 0.9% to $1,880.76 per ounce and was also down 0.9% on the week.<\/p>\n
Why did gold prices fall on Friday?<\/strong> How did gold perform over the week?<\/strong> What role does the U.S. nonfarm payrolls report play for gold markets?<\/strong> How did other precious metals trade?<\/strong>
Gold prices fell due to rising expectations of higher inflation and interest rates, which boosted the dollar and reduced the appeal of non-yielding assets amid escalating U.S.-Iran tensions.<\/p>\n
Spot gold was set to lose about 2.2% for the week, its largest weekly decline since early May.<\/p>\n
The nonfarm payrolls report influences expectations for Federal Reserve interest rate decisions; stronger labor data can support higher-for-longer rates, which typically pressures gold prices.<\/p>\n
Spot silver fell 1.7% to $72.6320 per ounce and was down 3.5% for the week, while spot platinum declined 0.9% to $1,880.76 per ounce and was down 0.9% for the week.<\/p>\n