Gold Set for Weekly Loss

Gold rose to around $5,130 per ounce on Friday, but remained on track for its its first weekly decline in five weeks, as a stronger US dollar and higher Treasury yields offset the geopolitical risk premium. While the ongoing Middle East conflict boosted demand for safe-haven assets, it also sent oil prices surging, raising inflation concerns and prompting traders to scale back bets on Federal Reserve rate cuts. Markets are now pricing in just one reduction this year, down from two earlier in the week. Recent US data also signaled strong economic momentum, with lower jobless claims, stronger productivity, fewer job cuts, and faster-than-expected services sector growth. Meanwhile, the US-Israeli conflict with Iran entered its seventh day, with Iran launching missiles and drones across the Gulf on Thursday, striking an oil refinery in Bahrain, while Israel continued airstrikes on Tehran and the US suspended operations at its embassy in Kuwait.

Gold erased early gains to trade slightly lower at around $5,115 per ounce on Thursday, as a stronger US dollar and reduced expectations for interest rate cuts by the Federal Reserve offset safe-haven demand linked to the escalating Middle East conflict. Tensions intensified after Tehran was hit by a large wave of strikes from Israel, targeting infrastructure reportedly linked to Iranian authorities, following earlier Iranian missile attacks that sent millions of Israelis into bomb shelters. Iranian officials also denied reports that their intelligence ministry had approached Washington for negotiations, dismissing the claims as false. At the same time, concerns over energy supply disruptions continued to push oil prices higher and fuel inflation worries, prompting traders to push back expectations for monetary easing. Markets now anticipate the first Fed rate cut in September, with two reductions still priced in for 2026.

Gold rose to about $5,160 per ounce on Thursday, extending gains from the prior session, as investors continued to monitor escalating tensions in the Middle East. The conflict entered a sixth day, with US and Israeli forces striking targets across Iran and Tehran retaliating with missile attacks on several neighboring states, including key energy facilities. President Donald Trump backed the American campaign, while US officials said an Iranian warship was sunk in international waters. Iranian authorities denied reports that their intelligence ministry had approached Washington for negotiations, calling the claims false. Meanwhile, the Treasury Secretary confirmed a global 15% tariff will begin this week and may revert within five months. Higher oil and gas prices have revived inflation concerns, prompting traders to delay expectations for easing by the Federal Reserve, with a first cut now seen in September and two reductions still priced in for 2026.