Gold Prices Slide as Strong Dollar and Rate Concerns Pressure Bullion

Gold prices moved lower during Asian trading on Friday, extending weekly losses as investors shifted toward the U.S. dollar amid growing concerns over inflation and interest rates. Market participants are also closely watching the upcoming U.S. nonfarm payrolls report for fresh signals on the health of the economy and the future direction of Federal Reserve policy.

Spot gold declined 0.8% to $4,440.84 per ounce, while gold futures fell 0.8% to $4,467.01 per ounce. The precious metal is on track for a weekly loss of approximately 2.2%, marking its weakest performance since early May.

The decline in gold prices comes as geopolitical tensions in the Middle East continue to escalate. Reports suggest that Iran has stepped away from negotiations with the United States, while both nations have exchanged fresh attacks. Additional pressure emerged after Iran-backed Hezbollah rejected a ceasefire agreement with Israel, raising concerns that regional hostilities could continue for an extended period.

Investors fear that prolonged conflict could keep oil prices elevated, fueling global inflation. Higher inflation expectations often encourage central banks, including the Federal Reserve, to maintain a hawkish stance on monetary policy. Rising interest rates generally reduce the attractiveness of non-yielding assets such as gold, leading to weaker demand.

Other precious metals also posted losses. Spot silver dropped 1.7% to $72.63 per ounce and was down 3.5% for the week. Platinum fell 0.9% to $1,880.76 per ounce, extending its weekly decline to nearly 1%.

Attention is now focused on the U.S. nonfarm payrolls report for May. Economists expect the data to show slower job growth, reflecting ongoing economic challenges and geopolitical uncertainty. The labor market remains a key factor in Federal Reserve decision-making alongside inflation.

A stronger-than-expected payrolls report could reinforce expectations that the Fed will keep interest rates higher for longer or potentially consider additional rate hikes later in 2026. With payroll figures beating forecasts in four of the last six months, investors remain cautious ahead of the highly anticipated release.