Gold Prices Hold Near Record Levels as Inflation Concerns Offset Middle East Ceasefire Hopes

Gold prices remained largely unchanged during Asian trading on Friday as investors assessed reports suggesting that the United States and Iran could extend their ceasefire agreement. While easing geopolitical tensions reduced some safe-haven demand, persistent inflation concerns driven by elevated oil prices continued to influence the precious metals market.

Spot gold traded near $4,495.9 per ounce, while U.S. gold futures slipped 0.1% to $4,526.17 per ounce. Despite reaching a two-month low in the previous session, gold recovered strongly and closed 0.8% higher after reports indicated that Washington and Tehran were preparing to resume diplomatic negotiations.

The gold market has experienced significant volatility throughout the week as traders reacted to changing developments surrounding the Middle East conflict. However, bullion prices are expected to finish the week relatively flat as investors balance geopolitical risks against inflation expectations and monetary policy outlooks.

Recent reports suggest that the U.S. and Iran may have reached a preliminary agreement to extend a 60-day ceasefire and maintain shipping access through the Strait of Hormuz, a crucial route for global energy supplies. The proposal still requires approval from U.S. President Donald Trump and confirmation from Iranian authorities.

Traditionally, geopolitical uncertainty supports gold prices because investors view the metal as a safe-haven asset. However, market participants are increasingly concerned that higher oil and energy costs linked to tensions in the Middle East could contribute to rising inflation. This scenario may force the Federal Reserve to keep interest rates higher for longer, reducing the appeal of non-yielding assets such as gold.

Supporting this view, the latest U.S. Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation measure, increased 3.8% year-over-year in April, marking the fastest pace in approximately three years. The stronger-than-expected inflation data reinforced expectations that borrowing costs could remain elevated well into next year.

Although U.S. Treasury yields eased slightly following the report, they stayed close to multi-month highs, limiting additional gains in gold prices. Meanwhile, other precious metals also moved lower, with silver falling 0.2% to $75.52 per ounce and platinum declining 0.4% to $1,915.3 per ounce.

Investors will continue monitoring inflation data, Federal Reserve policy signals, oil prices, and developments in U.S.-Iran relations, all of which are expected to play a key role in determining the future direction of gold and precious metals markets in 2026.