Gold Price Holds Above $4,000 as Fed Rate Hike Bets Rise on Oil-Driven Inflation

Gold prices ended Friday with modest gains, breaking a two-week losing streak as strong technical support near the $4,000 per ounce level offset mounting pressure from rising inflation concerns fueled by soaring oil prices.

Spot gold settled 0.1% higher at $4,052.98 per ounce, while U.S. gold futures also gained 0.1% to close at $4,055.25. Both benchmarks finished the week roughly 0.9% higher, recovering after recently falling to multi-month lows.

The precious metal found support despite a stronger U.S. dollar and higher Treasury yields, as investors weighed escalating geopolitical tensions and shifting expectations for the Federal Reserve’s policy meeting next week.

David Morrison, senior market analyst at Trade Nation, said gold rebounded after dropping below $3,960, briefly climbing above $4,160 before retreating as the U.S. dollar strengthened. He noted that rising oil prices, higher Treasury yields, and the worsening conflict between the U.S. and Iran helped boost the dollar, limiting gold’s upside.

Morrison added that support remains firm just below $4,000, but gold must convincingly break above $4,200 to signal a stronger recovery following its prolonged correction since late January.

Markets are closely watching the Federal Reserve, with the CME FedWatch Tool showing a 62% probability that policymakers will leave interest rates unchanged next week, down from 87% a week earlier. Meanwhile, the odds of a 25-basis-point rate hike have climbed to nearly 38%, reflecting growing concerns that persistent inflation could delay monetary easing.

Inflation fears intensified after Brent crude oil surged above $100 per barrel for the first time since May, driven by attacks on Saudi oil tankers in the Red Sea by Iran-backed Houthi militants. The threat to both the Bab el-Mandeb Strait and the Strait of Hormuz has heightened concerns over global energy supplies.

Geopolitical risks remain elevated as U.S. military strikes against Iran continue and diplomatic efforts appear stalled after reports that Tehran rejected a U.S.-backed ceasefire proposal.

Adding to inflationary pressure, President Donald Trump imposed new double-digit tariffs on imports from 60 major U.S. trading partners while expanding tariffs on Canadian goods, raising concerns that higher trade costs could further complicate the inflation outlook and influence the Fed’s policy path.