Gold prices ticked up during Asian trading on Friday, though the precious metal remained on course for a second consecutive weekly loss as investors weighed the inflationary risks tied to the U.S.-Israel conflict with Iran.
Bullion found some support as both the U.S. dollar and oil prices paused their recent advances, particularly after Washington announced additional waivers allowing the purchase of certain Russian crude in an effort to cushion supply disruptions linked to Iran.
By 01:14 ET (05:14 GMT), spot gold had risen 0.6% to $5,109.46 per ounce, while gold futures slipped 0.3% to $5,111.84 per ounce.
Gold facing second weekly drop while trading within a narrow band
Spot gold was on track to decline roughly 1.2% for the week, marking its second straight weekly fall.
Although the metal attracted some safe-haven demand as geopolitical tensions in the Middle East intensified, its upward momentum was limited by growing concerns that inflation could remain persistent.
Market participants fear that the Iran conflict may keep oil prices elevated for an extended period, potentially driving global inflation higher and prompting major central banks to adopt a more hawkish monetary stance.
As a result, expectations for near-term interest rate cuts by the Federal Reserve have gradually faded. The central bank is widely expected to leave borrowing costs unchanged at its upcoming policy meeting next week.
Since the start of the Iran conflict, gold has largely traded within a $5,000 to $5,200 per ounce range. While the metal remains higher for the year overall, its upward momentum has slowed after falling sharply from a record high close to $5,600 per ounce in late January.
Analysts at ANZ noted in a research report that despite recent headwinds, gold continues to serve “a key portfolio diversifier, providing protection against a broad range of macro and geopolitical uncertainties.”
Other precious metals also advanced on Friday but have delivered modest performance over the week. Spot silver climbed 0.7% to $84.3275 per ounce, while spot platinum rose 0.5% to $2,143.21 per ounce.
Markets look to PCE inflation data for direction
Investors are now focusing on the upcoming release of the U.S. personal consumption expenditures (PCE) price index, which may offer additional clues about the trajectory of the world’s largest economy.
The indicator is the Federal Reserve’s preferred measure of inflation and is expected to influence market expectations around future interest rate policy.
However, the data reflects January conditions and is unlikely to capture any inflationary effects tied to recent increases in energy prices.
The PCE report arrives just days before the Federal Reserve’s next policy meeting, where officials are broadly expected to keep interest rates unchanged. According to CME FedWatch data, markets anticipate that rates will remain steady until at least September.