Gold prices declined during trading on Friday, continuing their losses below the $4,600 per ounce level, as investor appetite weakened and buying momentum was lacking amid mixed economic signals and growing expectations that central banks will move towards tighter policies.
The precious metal appears to be on track to record losses for the second week in a row, remaining close to its lowest level in a month at around $4,510, which was recorded earlier this week.
These pressures come amid ongoing geopolitical tensions, particularly the stalled talks between the United States and Iran, which have kept oil prices high and fueled inflation fears. This has prompted major central banks, most notably the Federal Reserve, to adopt a more hawkish tone, putting pressure on gold as a non-yielding asset.
In the same vein, President Donald Trump escalated his rhetoric against Iran, rejecting a proposal to reopen the Strait of Hormuz and lift the blockade, and affirming that the naval blockade would continue until an agreement is reached on the nuclear program. Reports also indicated that the United States might consider launching new military strikes, increasing the risk of escalation and bolstering the dollar's safe-haven status, which in turn puts additional pressure on gold prices.
On the monetary policy front, the Federal Reserve decided to keep interest rates at the 3.50%–3.75% range, but the decision saw the largest number of opponents since 1992, as three members of the Federal Open Market Committee opposed the accommodative direction in the statement, reflecting a hawkish inclination in monetary policy.
Recent US economic data showed inflation accelerating in March, with the personal consumption expenditures (PCE) price index, released by the Bureau of Economic Analysis, rising 0.7% month-over-month and accelerating to an annual rate of 3.5%. The core PCE index also rose to 3.2%, while GDP data showed the US economy grew by 2.0% in the first quarter of 2020.
Conversely, the probability of an interest rate cut during 2026 has risen to more than 15%, limiting the dollar's gains and potentially providing some short-term support for gold.
Investors are awaiting the release of important economic data, most notably the ISM manufacturing purchasing managers' index, as well as monitoring developments in the Middle East, due to their direct impact on the movements of the dollar and gold prices.
Technically, gold is under pressure that could push it to test the $4,500 level, with $4,651 forming an important resistance level, while support levels appear at $4,623 and then $4,595, with the overall trend remaining vulnerable to further declines if the current pressures continue.