Gold prices traded within a narrow range during Friday’s Asian session as investors turned their attention to upcoming United States inflation data, while ongoing geopolitical tensions in the Middle East continued to shape sentiment.
By 3:40 pm AEST (5:40 am GMT), spot gold was little changed at US$4,764.70 per ounce, as market participants remained cautious ahead of the latest U.S. consumer price index (CPI) release.
The inflation report is expected to show a further rise in consumer prices in March, driven in part by higher crude oil costs linked to the conflict in the region.
A stronger reading could also reinforce expectations that the Federal Reserve will delay interest rate cuts.
Meanwhile, developments around the Strait of Hormuz have supported the U.S. dollar index (DXY), which has in turn weighed on gold prices.
Iran has halted shipping traffic through the key waterway following Israeli strikes on Lebanon, exacerbating concerns over global energy supply and inflation.
Donald Trump criticised Iran’s handling of oil flows through the Strait, warning of renewed military action if the ceasefire agreement fails.
Elevated oil prices continue to fuel inflation expectations and support a more hawkish outlook for U.S. monetary policy, factors that typically act as a headwind for non-yielding assets such as gold.
In other geopolitical news, Benjamin Netanyahu said Israel is prepared to begin direct negotiations with Lebanon, addressing a key sticking point in the fragile U.S.-Iran ceasefire.
U.S. officials have indicated that talks between Israel and Lebanon are expected to take place in Washington next week, while separate U.S.-Iran discussions are scheduled to begin in phases over the coming days.
