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Gold prices traded little changed on Friday but remained on track for a weekly decline as escalating military tensions between the United States and Iran boosted inflation concerns and strengthened expectations that the Federal Reserve could keep interest rates higher for longer.
Spot gold held near $4,125.03 per ounce, while U.S. gold futures slipped 0.1% to $4,135.67 per ounce. Despite Friday's stability, spot gold was down about 1.6% for the week as investors reassessed the outlook for inflation and monetary policy.
The precious metal came under pressure after the United States launched fresh strikes against Iran. President Donald Trump declared that the ceasefire with Tehran had ended and ordered additional military action, prompting retaliatory attacks from Iran. Although an Axios report indicated that regional mediators are working to revive a previous U.S.-Iran memorandum of understanding, uncertainty surrounding the Middle East conflict continues to weigh on financial markets.
The renewed geopolitical tensions pushed oil prices sharply higher, fueling fears of stronger energy-driven inflation. Rising inflation expectations have increased speculation that the Federal Reserve may adopt a more hawkish stance, with traders raising expectations for a U.S. interest rate hike in 2026, according to CME FedWatch data.
Higher interest rates typically reduce the appeal of non-yielding assets such as gold because investors can earn better returns from interest-bearing investments like bonds. This shift in expectations limited demand for bullion despite ongoing geopolitical risks, which often support safe-haven assets.
Other precious metals also posted weekly losses. Spot silver gained 0.5% on Friday to $60.2550 per ounce but remained down 4.1% for the week. Spot platinum advanced 1.2% to $1,636.14 per ounce during the session, though it was still lower by 0.4% on a weekly basis.
Investors are expected to closely monitor developments in the U.S.-Iran conflict, movements in oil prices, and upcoming Federal Reserve signals for further direction in gold and the broader precious metals market.
