Gold prices edged lower on Friday, though the metal remained on track for a weekly gain as traders weighed a fragile US-brokered ceasefire involving Iran against rising geopolitical uncertainty and shifting expectations around US monetary policy.
Spot gold was trading near $4,750 an ounce by 11:00 GMT, easing back from recent three-week highs but still holding firm after a volatile stretch driven by energy and geopolitical headlines.
Sentiment has been heavily influenced by developments in the Middle East, with US President Donald Trump’s announcement of a two-week ceasefire between the US and Iran earlier in the week initially helping to stabilise broader market sentiment, although the agreement has since shown signs of strain.
Continued Israeli strikes on Hezbollah-linked targets in Lebanon have raised doubts over the durability of the truce, particularly as questions persist over what was formally included in the original arrangement.
Those tensions have kept energy markets in focus, with the Strait of Hormuz remaining a critical pressure point for global oil supply routes. Disruptions in the region have previously pushed crude sharply higher, and although oil prices have eased back this week after recent spikes, the earlier surge near $120 a barrel continues to feed through into inflation expectations.
Gold’s reaction has been mixed. While the metal typically benefits from geopolitical stress, investors have also been drawn towards the US dollar at various points, limiting bullion’s upside.
The dollar has recently softened, however, falling over the past week, which has helped prevent a deeper pullback in gold.
Attention is now turning to upcoming US consumer inflation data due later today. Economists expect headline inflation to show an acceleration, largely reflecting higher energy costs following the recent oil shock, while core inflation is expected to rise more moderately.
Markets are watching closely for any sign that the Federal Reserve may be forced to keep interest rates elevated for longer, a scenario that tends to weigh on gold due to its lack of yield.
Underlying bond market moves have also provided some support, with US nominal and real yields easing overnight. That shift has helped stabilise gold despite the broader uncertainty, reinforcing the idea that rate expectations remain just as important as geopolitical risk in driving price direction.
Overall, traders remain caught between geopolitical risks, which are offering support but not in a straight line, while inflation and interest rate expectations continue to dominate medium-term positioning. For now, gold is holding its weekly advance, but the next decisive move is likely to depend on whether the ceasefire holds and how inflation data reshapes the policy outlook.