Gold prices edged lower during Friday’s Asian session but remained close to the US$4,600 level, as investors balanced safe-haven demand against rising expectations for higher interest rates.
By 3pm AEST, spot gold (XAU/USD) was down 0.3% at $4,608.72 per ounce, following a 1.7% gain in the previous session amid heightened geopolitical tensions in the Middle East.
Investor focus remained on developments surrounding the United States and Iran, particularly the ongoing blockade of Iranian ports and the continued closure of the Strait of Hormuz. United States President Donald Trump reaffirmed his stance, signalling the blockade would remain in place.
“Their economy is crashing, the blockade is incredible,” Trump said. “Their economy is a disaster. So we’ll see how long they hold out.”
Iranian President Masoud Pezeshkian criticised the move, describing the naval blockade as an “extension of military operations” and calling it “intolerable”.
While geopolitical risks typically support gold as a safe-haven asset, the current environment has also stoked inflation concerns due to elevated energy prices linked to supply disruptions.
This, in turn, has reinforced expectations that the U.S. Federal Reserve could maintain a tighter monetary policy stance or even consider further rate increases.
Gold, which does not yield interest, tends to lose appeal in a higher interest rate environment, limiting upside momentum despite ongoing uncertainty.
The Federal Reserve on Wednesday left its benchmark interest rate unchanged, in line with market expectations.
Fed Chair Jerome Powell noted that the economic outlook remains highly uncertain, with the conflict in the Middle East contributing to that uncertainty and complicating the policy outlook.
