Gold Set for Biggest Weekly Drop Since 1983

Gold tumbled 2% to $4,570 per ounce on Friday, on track for its largest weekly decline since 1983, as escalating Middle East tensions sent energy prices soaring and dashed hopes for near-term interest rate cuts. Prices extended their decline after reports that the Pentagon is deploying three warships and thousands of Marines to the region, prompting traders to price in a 50% chance of a Federal Reserve rate hike by October amid fears of sustained inflation. The safe-haven metal has fallen every week since the US-Israel strikes on Iran last month, pressured by rising Treasury yields, a stronger dollar, and profit-taking as investors liquidated positions to offset losses elsewhere. Earlier this week, the Federal Reserve, European Central Bank, Bank of England, and Bank of Japan held rates steady but signaled readiness to tighten policy further if inflationary pressures persist.

Gold decreased 2.02% to 4556.62 USD/t.oz

Gold held below $4,700 per ounce on Friday following a steep two-day selloff, and was on track for a sharp weekly decline as surging energy prices driven by the Middle East conflict stoked inflation concerns and dampened expectations for interest rate cuts. Higher energy prices and intensifying inflationary pressures prompted investors to rotate into the dollar and Treasuries at the expense of safe-haven metals. The energy-driven shock forced traders to reassess the policy outlook after a wave of hawkish signals from major central banks. The Fed kept rates unchanged, signaling no rate cuts until inflation clearly eases. At the same time, the ECB, BOJ, and BOE also left rates steady but struck more hawkish tones, indicating a bias toward tighter policy. Markets have now pushed back expectations for Fed rate cuts to 2027 and are pricing in two rate hikes each from the ECB and BOE this year, further weighing on gold’s appeal.