Gold prices fell by about 3% to $4,500 an ounce on Friday, heading for their biggest weekly loss since 1983, amid escalating geopolitical tensions and rising inflation expectations.
This sharp decline came as tensions in the Middle East involving Iran, the United States, and Israel escalated, leading to a significant rise in energy prices and diminishing hopes for an imminent interest rate cut.
Gold came under increasing pressure after reports that the Pentagon planned to deploy warships and thousands of Marines to the region, prompting traders to price in a 50% probability of the Federal Reserve raising interest rates by October, amid concerns that inflation could persist for longer.
Since tensions escalated last month, gold has continued to record consecutive weekly losses, affected by rising US Treasury yields and a strong dollar, along with profit-taking and investors liquidating their positions to offset losses in other markets.
Earlier this week, major central banks, including the Federal Reserve, European Central Bank, Bank of England and Bank of Japan, kept interest rates unchanged, but indicated their readiness to tighten monetary policy if inflationary pressures persist.
📌 Summary
Gold is under strong pressure near the $4,500 level, heading for its worst weekly performance in decades, driven by escalating tensions, rising energy prices, and increasing expectations of tighter monetary policy.