Gold prices were little changed at the start of trading on Friday but remained on track for a weekly decline as investors weighed the impact of rising tensions between the United States and Iran and the possibility of higher U.S. interest rates.
Spot gold held steady at $4,122.09 per ounce, but it is still set to post a weekly loss of more than 1%. Meanwhile, U.S. gold futures for August delivery slipped 0.2% to $4,131.50 per ounce.
Markets have been closely watching the latest developments in the Middle East after military tensions escalated between Washington and Tehran. Iranian forces reportedly launched attacks on U.S. military infrastructure in several Gulf countries following U.S. strikes on sites in southern and eastern Iran.
The renewed conflict has raised concerns about its potential impact on global inflation, especially if energy prices continue to rise. Higher inflation could encourage the U.S. Federal Reserve to keep interest rates elevated or even raise them further.
As a result, expectations for a rate hike have increased. Data from CME Group’s FedWatch tool shows that investors now see a 64% chance of a U.S. interest rate increase at the Federal Reserve’s September meeting, up from around 54% just a week ago.
Higher interest rates are generally considered negative for gold because the metal does not pay interest, making other interest-bearing investments more attractive to investors.
Other precious metals also showed mixed performance on Friday. Spot silver fell 0.1% to $59.94 per ounce, while platinum gained 0.2% to $1,614.22 per ounce. Palladium rose 0.4% to $1,252.75 per ounce.
Despite these gains, silver, platinum, and palladium are all expected to finish the week in negative territory, reflecting the cautious mood across precious metals markets.
