Key Takeaways
- Precious metal declined approximately 2% Friday, marking third consecutive week of losses
- Federal Reserve Chair Kevin Warsh’s hawkish messaging strengthened the dollar and lifted Treasury yields
- Nearly half of Fed officials project at least one interest rate increase before year-end
- Temporary US-Iran peace agreement provided short-lived support to gold prices earlier this week
- Suspension of Geneva peace talks created additional market uncertainty
The precious metal continues its downward trajectory, posting a third straight weekly decline as expectations for Federal Reserve interest rate increases and a rallying US dollar pressure prices.
Spot gold tumbled approximately 1.8% to $4,134 per ounce Friday. Gold Futures in the US slipped 2.2% to $4,152. The yellow metal is poised to register a weekly decline of about 2%.
Early-week optimism following the announcement of an interim peace agreement between the US and Iran quickly evaporated after the Federal Reserve’s policy announcement on Wednesday.
Hawkish Federal Reserve Reshapes Market Dynamics
Kevin Warsh, the newly appointed Fed Chair, adopted a notably hawkish stance during the policy meeting, triggering a surge in Treasury yields and propelling the US dollar to levels not witnessed since May 2025.
The US Dollar Index jumped 0.8% Thursday. When the dollar appreciates, gold becomes costlier for international buyers using other currencies, dampening global demand.
Nine out of 19 Federal Reserve policymakers currently anticipate at least one rate adjustment upward during the remainder of 2025. Market participants are now assigning more than an 80% probability to a rate increase by year’s end.
Elevated interest rates increase the opportunity cost of maintaining gold positions, as the metal generates no yield or dividend payments. Christopher Wong, a strategist with Oversea-Chinese Banking Corp, noted that gold typically faces headwinds in the period preceding an initial rate hike.
Wong emphasized the critical question of whether this would represent an isolated precautionary move or signal the beginning of a comprehensive tightening campaign. Should it prove to be a standalone adjustment rather than a sustained cycle, gold prices could potentially rebound.
US-Iran Agreement Provides Insufficient Support
The interim understanding between Washington and Tehran was anticipated to restore commercial shipping access through the Strait of Hormuz. Vessel traffic has started resuming passage through the strategic waterway after the US announced the blockade’s termination.
Nevertheless, Swiss authorities disclosed that scheduled negotiations toward a comprehensive peace settlement would not proceed as planned Friday. Reports indicate US Vice President JD Vance halted the Geneva discussions, casting uncertainty over the agreement’s longevity.
Market observers suggest it may require several months before oil and natural gas flows through the strait normalize to pre-crisis levels. Crude prices recovered Friday following sharp declines earlier in the week, reigniting some inflationary concerns.
Silver decreased 2.5% to $64.09 per ounce. Platinum retreated 1.4% to $1,674. Copper futures also experienced losses across both the London Metal Exchange and US markets.
The Bloomberg Dollar Spot Index registered a 0.9% weekly gain, intensifying downward pressure throughout commodity markets.
The near-term outlook for gold will largely hinge on whether the Federal Reserve proceeds with monetary tightening and the trajectory of diplomatic efforts between the US and Iran.
