Gold prices are edging toward a weekly gain as investors weigh geopolitical tensions in the Middle East against shifting U.S. inflation signals, creating renewed volatility in global bullion markets.
Spot gold prices slipped 0.4 per cent on Friday to $4,747.38 per ounce, while gold futures declined by 1 per cent to $4,770.72 per ounce. However, the trend remained positive, with spot prices up 1.6 per cent for the week and futures gaining 2 per cent, extending a recovery streak following sharp losses recorded in March at the height of escalating tensions in the Middle East.
The rebound in bullion underscores its enduring role as a hedge against geopolitical risk, even as investors remain cautious amid uncertainty surrounding a fragile ceasefire between the United States and Iran. While the temporary truce has helped stabilise global financial markets, lingering tensions; particularly ongoing Israeli military activity in Lebanon, continue to cast doubt over the durability of diplomatic progress.
Market sentiment has been further complicated by conflicting signals around upcoming negotiations between U.S. and Iranian officials. Reports indicating disagreements over the scope of the ceasefire, as well as uncertainty about Iran’s participation in scheduled talks, have heightened investor caution.Â
At the same time, the continued disruption of oil flows through the Strait of Hormuz remains a critical variable shaping broader market dynamics. With the strategic shipping corridor operating at significantly reduced capacity, energy markets have experienced sustained supply pressure, feeding into global inflation trends and indirectly influencing bullion demand.
However, gold’s traditional safe-haven role has faced competition from the U.S. dollar during the current geopolitical cycle. Heightened demand for dollar-denominated assets has strengthened the currency, making gold more expensive for international buyers and limiting the metal’s upside potential.
Looking ahead, market participants are expected to closely monitor developments in U.S.-Iran negotiations, as well as the trajectory of energy prices and their impact on global inflation. Any escalation in tensions or prolonged disruption to oil supply routes could reinforce gold’s upward momentum, while a sustained diplomatic resolution may temper demand.
