Gold prices moved slightly higher on Friday but remained on course for a weekly decline, as a stronger U.S. dollar and climbing Treasury yields reduced the metal’s appeal despite ongoing geopolitical tensions in the Middle East.
At 04:35 ET (09:35 GMT), spot gold was up 0.4% at $5,101.35 per ounce, while gold futures rose 0.6% to $5,110.14 an ounce.
Even with Friday’s modest gains, bullion was set to fall by more than 3% for the week, pressured by the recent advance in the dollar and fading expectations that the Federal Reserve will cut interest rates soon.
Iran conflict keeps markets uneasy
The conflict in the Middle East entered its seventh day on Friday with little indication that tensions are easing, leaving global markets on edge.
Clashes involving the United States, Israel, and Iran have intensified in recent days, with missile strikes and retaliatory attacks spreading across the region and raising concerns about potential disruptions to global energy supplies.
U.S. President Donald Trump said he wanted a role in deciding Iran’s next leader once the war ends, remarks that underscored heightened uncertainty over the region’s political future.
Gold typically attracts demand during periods of geopolitical instability and when interest rates are lower. However, the metal has struggled to build momentum this week as a stronger dollar and rising bond yields made it less attractive to investors.
Dollar strength and rate outlook cap gains
The U.S. Dollar Index is on track to post a weekly gain of about 1.5%.
Meanwhile, oil prices are poised to climb more than 18% this week as the conflict threatens vital energy infrastructure and shipping routes in the Gulf. The jump in crude prices has renewed concerns about a fresh wave of global inflation.
These inflation worries have complicated the policy outlook for central banks, including the U.S. Federal Reserve. Higher energy prices tend to push inflation upward and could make policymakers more cautious about cutting interest rates in the near future.
Investors are now focusing on the U.S. February nonfarm payrolls report due later Friday, which may offer new insight into labor market strength and the potential path of monetary policy.
A stronger-than-expected report could reinforce the view that the Federal Reserve can afford to delay any interest rate cuts.
LME copper inventories jump
Among other precious metals, silver climbed 1.9% to $83.778 per ounce, while platinum rose 0.8% to $2,147.35 an ounce.
Benchmark copper futures on the London Metal Exchange slipped 0.1% to $12,919.00 per ton, while U.S. copper futures gained 0.4% to $5.8320 per pound.
Copper inventories tracked by the LME jumped nearly 8% on Thursday, reaching a 16-month high.
“The inventory build reflects strong inflows into LME warehouses, driven by shifting regional pricing incentives. LME copper has been trading at only a narrow premium to Comex, reversing last year’s structure that encouraged metal to flow into US warehouses. As these pricing signals normalise, metal is increasingly being redirected back into global exchange stocks,” said analysts at ING, in a note.
“The inventory surge creates a tougher near term backdrop for prices,” ING added.