Gold was on track for weekly losses as uncertainty over the progress of US-Iran talks to end the war weighed on global markets.
Bullion was near $4,450 an ounce on Friday, capping a nearly 2% decline in a week that has seen the most serious clashes in the Middle East since a ceasefire was agreed in early April. On Thursday, Iran-backed Hezbollah rejected a US-brokered ceasefire between Israel and Lebanon. This was followed by missile and drone attacks on Kuwait and Bahrain and a US attack on an oil tanker headed towards Iran.
Talks to end the broader conflict have stalled after coming close to a solution last week. US President Donald Trump said on Thursday that peace talks were in the “final” stage, while Iranian Foreign Minister Abbas Araghchi earlier said that “no concrete progress has been achieved.”
Now in its fourth month, the war has disrupted energy flows through the Strait of Hormuz, sent oil prices higher and raised concerns about global inflation. This makes central banks more likely to keep interest rates stable or raise them – an unfavorable situation for precious metals, which do not pay interest.
The perception that the standoff around Hormuz has moved beyond resolution has raised the possibility of an energy shock, and that means “shorter money, and that’s a pressure on gold,” said Nicolas Frappel, global head of institutional markets at ABC Refinery. That said, bullion is trading below key technical levels on the daily and 4-hour charts, suggesting that the trend remains negative on that time frame.
Gold fell sharply after the conflict began in late February and has traded in a tight range over the past few weeks. On Friday, it was down about 16% from the immediate pre-war level.
Meanwhile, Federal Reserve Bank of San Francisco President Mary Daly said there is so much uncertainty in the US economy that it is difficult to have any idea about where rates are headed. “We are prepared to respond in any way we can, no matter what the economy brings,” he said at the Bloomberg Tech conference on Thursday.
Spot gold fell 0.5% to $4,452.68 an ounce at 2:58 pm in Singapore. Silver fell 1.7% to $72.61 an ounce. Platinum also declined, while palladium moved up. The Bloomberg Dollar Spot Index was little changed.
