Gold Prices Rise Slightly but Head for Weekly Loss Amid Oil Surge and Inflation Fears

Gold prices edged higher on Friday but remained on track for a weekly decline as rising oil prices and geopolitical tensions between the United States and Iran fueled concerns over inflation and prolonged high interest rates. Spot gold increased by 0.3% to $4,707.43 per ounce, while gold futures held steady at $4,724.11 per ounce. Despite the slight rebound, spot gold has dropped 2.6% over the past week, with futures declining by 3.2%.

The recent volatility in gold markets is closely tied to movements in oil prices, which stayed above $100 per barrel even after trimming earlier gains. Escalating uncertainty surrounding U.S.-Iran relations has driven energy prices higher, particularly after former President Donald Trump indicated no urgency in resolving the conflict. As a result, both global and U.S. oil benchmarks are set to record their largest weekly gains since early March.

Higher oil prices are intensifying fears of rising inflation, which could prompt central banks to maintain or even increase interest rates. This environment typically puts pressure on non-yielding assets like gold, as higher rates boost the appeal of interest-bearing investments. Analysts note that ongoing geopolitical instability and unclear developments in the Middle East are adding to inflation concerns, potentially limiting gold’s upside.

Additionally, the U.S. dollar has shown modest strength this week, further weighing on gold demand. A stronger dollar makes gold more expensive for international buyers, reducing its attractiveness in global markets. The combination of elevated oil prices, inflation worries, and currency strength continues to shape the outlook for gold, leaving investors cautious despite short-term gains.