Gold Prices Slip as Iran Conflict and Fed Rate Hike Fears Weigh on Market Sentiment

Gold prices edged lower during early Asian trading on Friday, with investors remaining cautious amid ongoing uncertainty surrounding the Iran conflict and the potential impact on U.S. interest rates. The precious metal was also on track for a subdued weekly performance as traders balanced geopolitical risks with growing expectations of tighter monetary policy from the Federal Reserve.

Spot gold declined 0.2% to $4,532.95 per ounce, while gold futures also slipped 0.2% to $4,533.90 per ounce. Despite recent volatility, spot gold was set to post a weekly loss of around 0.2%, reflecting mixed market sentiment driven by developments in U.S.-Iran relations.

Investor optimism briefly improved after U.S. President Donald Trump delayed a potential military strike against Iran. Reports suggesting that a final draft of a peace agreement had been prepared also helped calm market fears. However, uncertainty quickly returned after Trump warned that military action could still occur if Tehran failed to reach an agreement regarding its nuclear program.

Tensions in the Middle East continued to support elevated oil prices, especially as concerns grew over limited oil flows through the Strait of Hormuz. U.S. officials criticized Iran’s proposal to impose transit fees through the critical shipping route, raising fresh concerns about global energy supply disruptions and rising inflation pressures.

Higher oil prices have already contributed to stronger U.S. inflation data over the past two months. This has fueled speculation that the Federal Reserve could raise interest rates later this year, a development that typically pressures non-yielding assets such as gold.

Minutes from the Fed’s late-April meeting revealed that several policymakers were increasingly open to additional rate hikes if inflation remains elevated. The prospect of higher borrowing costs has limited upside momentum in the gold market.

Other precious metals also traded lower on Friday. Spot platinum fell 0.2% to $1,967.98 per ounce, while spot silver slipped 0.2% to $76.5145 per ounce.