Gold prices edged lower on Friday, although the precious metal remained on track to post its first weekly gain in three weeks as geopolitical uncertainty continued to support demand despite expectations that U.S. interest rates could remain elevated for longer.
At 02:14 ET (06:14 GMT), spot gold (XAU/USD) declined 0.5% to $4,030.55 per ounce, while gold futures fell 0.4% to $4,032.75. Silver (XAG/USD) slipped 0.4% to $57.42 per ounce, and platinum (XPT/USD) dropped 0.7% to $1,585.43.
Geopolitical risks remain supportive for bullion
Although gold weakened after falling nearly 2% during the previous session, prices still recorded a weekly gain of around 0.8%, putting the metal on track to break a two-week losing streak.
Investor sentiment remained influenced by escalating tensions in the Middle East after Iran-backed Houthi forces in Yemen attacked two Saudi oil tankers in the Red Sea. In response, U.S. President Donald Trump warned that Washington would hold Iran accountable for any future attacks by the Houthis on commercial shipping and indicated that further military action against Tehran remained possible.
Adding to market uncertainty, The New York Times reported that Iran had rejected a U.S.-supported ceasefire proposal, reducing expectations of a near-term easing in the conflict.
The geopolitical developments helped keep oil prices elevated, reinforcing inflation concerns.
Strong U.S. data strengthens higher-for-longer rate expectations
Economic data also weighed on gold after stronger-than-expected U.S. labour market figures increased the likelihood that the Federal Reserve will maintain restrictive monetary policy.
Initial jobless claims unexpectedly declined to 187,000, the lowest level in decades, pushing the benchmark 10-year U.S. Treasury yield to its highest level since January 2025.
Markets currently assign roughly a 34% probability to a 25-basis-point interest rate increase at next week’s Federal Reserve meeting, reflecting persistent inflation concerns driven by resilient employment data and higher energy prices.
Analysts at Nomura expect policymakers to leave rates unchanged, adding that Federal Reserve Chair Kevin Warsh is unlikely to offer significant forward guidance because the July meeting does not include updated economic projections or a revised dot plot.
Technical picture remains positive
According to IG senior market analyst Tony Sycamore, gold’s recent weakness has been driven by rising Treasury yields, a stronger U.S. dollar and softer investor sentiment following the latest geopolitical developments.
The U.S. Dollar Index remained close to 101.45 after advancing in the previous session, while elevated bond yields continued to reduce the appeal of non-yielding assets such as gold.
Despite the recent pullback, Sycamore believes the broader technical outlook remains constructive, with gold continuing to build support above its late-June low of $3,942.
He noted that a sustained move above the early-July high of $4,202 would reinforce the bullish outlook and could open the way for a recovery toward the 200-day moving average near $4,495.
Sycamore added that IG maintains a cautiously bullish view while prices remain above late-June support, although near-term direction is likely to depend on next week’s Federal Reserve meeting and further developments in the Middle East.