Gold prices moved modestly higher on Friday as investors returned to the market following the previous session’s sharp decline. Even so, the precious metal remained on track for its largest weekly loss since early June as escalating tensions between the United States and Iran continued to fuel inflation concerns.
At 03:12 ET (07:12 GMT), spot gold (XAU/USD) gained 0.47% to $3,995.35 an ounce, while Gold Futures rose 0.18% to $3,999.22. Silver (XAG/USD) slipped 0.18% to $55.43 an ounce and platinum (XPT/USD) declined 2% to $1,589.57.
Gold heads for its largest weekly decline in more than a month
Although prices recovered on Friday, gold remained approximately 3% lower for the week, putting bullion on track for its biggest weekly decline since the beginning of June as investors continued to favour the U.S. dollar and other interest-bearing assets.
Selling pressure intensified after fresh U.S. strikes on Iranian targets on Thursday, following attacks a day earlier that damaged an oil tanker near Iran’s main export terminal. The continued escalation has prolonged the Middle East conflict, supporting higher crude prices and renewing fears that rising energy costs could drive inflation higher again.
Elevated oil prices could complicate the Federal Reserve’s policy outlook by increasing the risk that inflation remains above target. Such a scenario would likely keep interest rates higher for longer, supporting Treasury yields and the U.S. dollar while reducing demand for non-yielding assets such as gold.
Although this week’s U.S. consumer and producer inflation reports pointed to easing underlying price pressures, markets have largely looked beyond those figures amid concerns that the latest rise in oil prices could reverse the recent disinflation trend.
Federal Reserve maintains cautious stance
Federal Reserve policymakers continue to emphasise that inflation risks remain despite recent signs that price growth has moderated.
Tony Sycamore, Senior Market Analyst at IG, said the absence of a stronger recovery following softer-than-expected U.S. CPI and PPI data was “not a particularly encouraging sign” for gold in the near term.
He added: “The overnight decline now brings a stern test to the view that gold has formed a base around the late-June low of $3,942.”
According to Sycamore, a decisive move below that level could leave the metal vulnerable to the October 2025 low near $3,886, while a break above resistance around $4,140 would improve the technical picture.
“For now, the metal starts the day in a delicate spot, feeling the weight of a stronger dollar and risk aversion flows,” he added.
Gold has traded close to the psychologically important $4,000-an-ounce level in recent weeks as Federal Reserve officials, including Chair Kevin Warsh, Governor Christopher Waller and New York Fed President John Williams, have repeatedly stressed that inflation remains too high to justify lower interest rates.
The central bank has continued to signal that inflation remains above its 2% objective and that policymakers require sustained evidence of easing price pressures before considering monetary policy easing, leaving investors closely watching factors that could reignite inflation, including higher energy prices.