Gold prices edged lower during Friday's Asian trade, remaining under pressure as a stronger United States dollar and renewed inflation concerns outweighed safe-haven demand driven by geopolitical tensions.
Spot gold was down 0.3% at $4,677.29 per ounce by 3:25 pm AEST (5:25 am GMT), hovering near a two-week low reached in the previous session.
The precious metal is now on track to post its first weekly decline in five weeks.
The pullback comes despite a fragile global risk environment, with markets closely monitoring escalating tensions between the United States and Iran, particularly around the strategically vital Strait of Hormuz.
While geopolitical uncertainty would typically support gold, the U.S. dollar has strengthened amid the standoff, limiting the metal’s appeal.
Inflation concerns have also resurfaced, further complicating the outlook for bullion. Elevated oil prices, driven by ongoing disruptions to energy flows through the Middle East, have raised fears of a broader surge in global inflation.
This dynamic has tempered expectations that the U.S. Federal Reserve will adopt a more dovish policy stance, instead fuelling speculation that interest rates may remain higher for longer. Such a shift is typically negative for non-yielding assets like gold.
Tensions between Washington and Tehran remain elevated, with the U.S. maintaining a naval blockade of Iranian ports.
Iran’s Foreign Minister Abbas Araghchi has described the blockade as an act of war, while chief negotiator Mohammad Bagher Ghalibaf indicated that a full ceasefire would only be meaningful if maritime restrictions were lifted.
Adding to the strain, President Donald Trump has ordered the U.S. Navy to “shoot and kill any boat” laying mines in the key shipping route, underscoring the risk of further escalation.
Looking ahead, investors will turn their attention to the revised reading of the University of Michigan U.S. Consumer Sentiment Index for further clues on the health of the economy.
