Gold prices eased slightly on Friday as a firmer U.S. dollar and persistent uncertainty over the fragile U.S.-Iran ceasefire weighed on the market, yet the precious metal remained on track for its third consecutive weekly advance.
Investors continued to bet on earlier and more aggressive Federal Reserve rate cuts, providing underlying support for the non-yielding asset amid lingering geopolitical risks.
Spot gold fell 0.2% to $4,752.67 per ounce by 07:20 GMT. For the week, however, the metal has climbed 1.6%, extending a rebound that has defied earlier pressure from the Middle East conflict. U.S. gold futures for June delivery dropped more sharply, losing 0.9% to $4,776.60.
The stronger dollar, as measured by the dollar index, made dollar-denominated gold more expensive for buyers using other currencies, contributing to the intraday pullback. But the broader narrative this week has been one of cautious optimism: traders are pricing in a more dovish Fed path as inflation signals remain contained.
“There’s a lack of clarity about the way the ceasefire is evolving in the Middle East and what that means to energy markets… so we’re in sort of a little bit of a holding pattern (with gold) going into the final session of the week,” said Kyle Rodda, senior financial market analyst at Capital.com.
The context is stark. Since the Iran war erupted on February 28, spot gold has shed roughly 10%, hammered by surging energy prices that stoked fresh inflation fears and raised the specter of higher U.S. interest rates for longer.
The two-week-old ceasefire between Washington and Tehran – already described as fragile – showed new cracks on Friday after the U.S. accused Iran of violating commitments related to the Strait of Hormuz, the critical chokepoint through which about 20% of the world’s oil and liquefied natural gas flows.
Yet oil markets took the opposite view. Brent crude has tumbled more than 11% this week on hopes that the truce could soon reopen the strait fully, easing supply concerns.
Rodda captured the binary outlook neatly: “If things break down, (gold) could end up back in the mid-$4,000s pretty quickly. But if the ceasefire holds and the peace deal starts to look more likely, then we could push through $5,000.”
On the macroeconomic front, fresh U.S. data offered little to derail the rate-cut narrative. The Federal Reserve’s preferred inflation gauge—the Personal Consumption Expenditures (PCE) index—rose 2.8% in the 12 months through February, exactly in line with economists’ forecasts. Markets now await March’s Consumer Price Index (CPI) release later Friday for further clues on the central bank’s next moves.
According to the CME’s FedWatch Tool, traders have lifted the probability of at least a 25-basis-point rate cut by December to 31%, up from 20% in the previous session. Lower rates typically reduce the opportunity cost of holding gold, which pays no yield.
Physical demand offered mixed signals. In India, buying picked up modestly ahead of a major festival, while in China, retail interest cooled and premiums narrowed.
Among other precious metals, spot silver bucked the trend, rising 0.5% to $75.48 per ounce. Platinum fell 2.5% to $2,049.84, and palladium slipped 0.3% to $1,552.59.
As trading winds down for the week, the gold market finds itself in a delicate balance: geopolitical headlines could swing prices violently in either direction, but the steady drumbeat of expected monetary easing continues to provide a floor. Whether that floor holds – or cracks under renewed Middle East tension – will likely dominate the coming sessions.
WHAT YOU SHOULD KNOW
Gold prices dipped slightly on Friday amid a stronger dollar and ongoing uncertainty over the fragile U.S.-Iran ceasefire, yet the metal is still set to post its third straight weekly gain.
Markets are increasingly pricing in earlier and deeper U.S. Federal Reserve rate cuts, which continue to provide strong underlying support for gold despite geopolitical jitters.
