Gold Near Record Highs, Set for Seventh Weekly Gain

Gold hovered above $4,500 an ounce on Friday and was on track to finish the week little changed, as conflicting signals surrounding US-Iran peace negotiations kept investors cautious over inflation risks and the outlook for interest rates. Tehran stated that the latest US proposal had partially bridged the gap between the two sides. However, reports that Iran’s Supreme Leader ordered the country’s enriched uranium stockpile to remain within its borders complicated negotiations, as dismantling Iran’s nuclear program remains a key US objective. Iran is also reportedly in talks with Oman on establishing a permanent toll system that would formalize its control over shipping traffic through the Strait of Hormuz, though President Donald Trump rejected the idea. Despite the recent stability, gold prices remain about 14% lower since the conflict began, amid concerns that an energy-driven inflation shock could prompt central banks to tighten monetary policy.

Gold fell toward $4,500 an ounce on Thursday as hopes for a US-Iran peace deal faded following reports that Iran’s Supreme Leader Ayatollah Mojtaba Khamenei issued a directive ordering the country’s uranium to remain on Iranian soil. The directive contradicted Israeli officials’ claims that Iran’s highly enriched uranium would need to be transferred out of the country as part of any peace deal, according to Reuters. Meanwhile, Iran is reportedly restoring its military capacity at a faster pace than expected, stoking fears of a renewed conflict in the Middle East. The prospect of a prolonged conflict sent oil prices back toward four-year highs, adding to inflation concerns and raising expectations that central banks may need to tighten monetary policy. Also, minutes from the Federal Reserve’s latest policy meeting showed that most officials believe a rate increase this year could still be warranted if inflation remains above the Fed’s 2% target.

Gold held above $4,500 an ounce on Thursday after rising more than 1% in the previous session, supported by growing optimism that an imminent peace agreement between the US and Iran could ease inflationary pressures and reduce concerns over interest rate hikes. President Donald Trump said the US was in the final stages of negotiations with Iran, fueling expectations that the strategically important Strait of Hormuz may soon reopen. The prospect of restored shipping flows triggered a sharp decline in oil prices, helping temper inflation fears and lowering expectations that central banks will need to tighten monetary policy. At the same time, minutes from the Federal Reserve’s latest policy meeting showed that most officials believe a rate increase this year could still be warranted if inflation remains above the Fed’s 2% target. Investors remain divided on whether the central bank will raise rates by December or leave borrowing costs unchanged through year-end.