Precious Metal Retreats Despite Middle East De-escalation
Gold prices moved lower in Asian trading on Friday and remained on course for a third consecutive weekly decline, as investors focused on the Federal Reserve’s increasingly hawkish stance and the strength of the U.S. dollar rather than the easing of tensions between the United States and Iran.
Spot gold dropped 1.8% to $4,134.86 an ounce by 06:40 GMT, while August gold futures fell 2.2% to $4,152.25 per ounce.
The metal is on track to finish the week down around 2%, reversing gains recorded earlier in the week when optimism surrounding the U.S.-Iran agreement initially boosted demand for safe-haven assets.
Federal Reserve Signals Keep Pressure on Bullion
Market sentiment toward gold weakened after the Federal Reserve’s latest policy meeting, where officials reinforced expectations that interest rates may remain elevated for longer than previously anticipated.
Although the central bank left rates unchanged on Wednesday, nine of the Fed’s 19 policymakers indicated that they expect at least one additional rate increase before the end of the year.
Comments from Federal Reserve Chair Kevin Warsh were interpreted as notably hawkish by investors, driving Treasury yields higher and helping lift the U.S. dollar to its strongest level in more than a year.
The U.S. Dollar Index held near recent highs during Asian trading after surging 0.8% on Thursday to its highest level since May 2025.
A stronger dollar typically reduces the appeal of gold by making dollar-denominated commodities more expensive for international buyers. Higher interest rates also increase the opportunity cost of holding non-yielding assets such as bullion.
Futures markets are now pricing in a probability of more than 80% that the Fed will raise rates again before year-end.
Uncertainty Over Iran Talks Adds to Market Volatility
Additional pressure on gold emerged after Switzerland confirmed that planned discussions aimed at securing a final agreement to end the Middle East conflict would not proceed on Friday.
Reports indicated that U.S. Vice President J.D. Vance had suspended the scheduled negotiations in Geneva, creating fresh uncertainty over the durability of the recently announced interim agreement between Washington and Tehran.
The agreement had been expected to facilitate the reopening of shipping routes through the Strait of Hormuz, a development that contributed to a sharp decline in oil prices earlier in the week.
Oil prices rebounded modestly on Friday, reviving some concerns about inflation and adding another layer of complexity to the outlook for precious metals.
Silver, Platinum and Copper Also Move Lower
The weakness extended across the broader metals complex.
Silver fell 2.5% to $64.09 per ounce, while platinum declined 1.4% to $1,674.51 per ounce.
In industrial metals, benchmark copper futures on the London Metal Exchange slipped 0.9% to $13,582.33 per tonne. U.S. copper futures also retreated, falling 1% to $6.30 per pound.