TLDR
- Spot gold declined 0.6% Friday to settle at $4,101.11 per ounce, heading toward a 1.8% weekly decline
- President Trump announced the end of the Iran ceasefire and authorized additional military operations
- Escalating oil prices are intensifying inflation concerns, boosting expectations for a 2026 Fed rate increase
- Elevated interest rates diminish gold’s appeal by raising the opportunity cost of holding the zero-yield asset
- Silver tumbled more than 4% this week; platinum demonstrated resilience with only a 0.3% weekly drop
Precious metals faced downward pressure on Friday, with gold heading for a weekly loss driven by escalating U.S.-Iran hostilities and mounting concerns over monetary policy.
Spot gold declined 0.6% to reach $4,101.11 per ounce. Gold futures retreated 0.8% to $4,108.90. Throughout the week, spot gold registered approximately a 1.8% decline.
Other precious metals experienced similar headwinds. Spot silver decreased 0.7% on Friday and posted a weekly loss exceeding 4%. Platinum dipped 0.1% lower on Friday while managing a more modest weekly decline of only 0.3%.
Middle East Military Escalation Shakes Commodity Markets
The downturn in gold was primarily driven by intensifying hostilities in the Middle East. President Donald Trump announced the termination of the Iran ceasefire agreement and authorized new military operations. Iran launched counterstrikes in response.
According to an Axios report, regional intermediaries were attempting to preserve a recently established U.S.-Iran memorandum of understanding. Nevertheless, prospects for regional stability remained doubtful.
The escalating military conflict propelled oil prices sharply higher. This development heightened fears about energy-induced inflation resurfacing while the Federal Reserve maintains vigilance over price stability.
Financial markets increased their probability assessments for a Fed rate hike in 2026 during the week, based on CME Fedwatch data.
Interest Rate Concerns Undermine Gold’s Safe-Haven Status
Rising interest rates pose challenges for gold investment. Since the precious metal generates no income, increasing rates make bonds and similar fixed-income securities more appealing alternatives. This dynamic reduces gold’s attractiveness to investors.
ANZ analysts observed that gold received some underlying support from expectations that Middle East tensions would not spiral further. However, they emphasized that worries about persistent inflation and the Fed maintaining elevated rates continued applying downward pressure on valuations.
Gold has generally failed to perform its traditional safe-haven role since the U.S.-Iran confrontation intensified. Monetary policy anxiety has eclipsed demand for the metal as a protective asset during geopolitical uncertainty.
The dollar stabilized this week following previous week’s declines. A firmer dollar typically pressures gold prices, as the metal is denominated in U.S. currency.
Platinum demonstrated greater resilience compared to gold and silver throughout the week. Its 0.3% weekly retreat was substantially smaller than the declines observed in other precious metals.
Market participants will remain focused on any Middle East developments and potential shifts in Federal Reserve messaging that could influence rate expectations in coming weeks.
At the time of writing, spot gold was trading at $4,102.64, reflecting a $21.18 daily decline.
