Global gold prices rose on Friday and headed for a weekly gain as investors returned to safe-haven assets amid renewed geopolitical uncertainty in the Middle East and shifting expectations around United States monetary policy.
The rally in bullion was supported by a weaker U.S. dollar after traders scaled back expectations of further interest rate hikes by the Federal Reserve following the release of stronger-than-expected April employment data. At the same time, escalating military tensions involving the United States and Iran around the Strait of Hormuz heightened concerns over global energy security and inflationary pressures, reinforcing demand for precious metals.
Spot gold rose 0.7 percent to $4,717.91 per ounce, while U.S. gold futures climbed 0.4 percent to $4,727.11 per ounce. The precious metal has gained more than 2 percent for the week after recovering from one-month lows recorded earlier in May.
Analysts said investor sentiment was also supported by comments from U.S. President Donald Trump, who maintained that a ceasefire between Washington and Tehran remained intact despite fresh military confrontations in and around the Strait of Hormuz, one of the world’s most strategic oil transit routes.
Markets have remained intensely focused on developments in the Gulf region, particularly the security situation surrounding the Strait of Hormuz, through which nearly one-fifth of global oil and gas supplies pass. Iran has effectively shut down access to the waterway since conflict erupted at the end of February, creating what analysts describe as the largest supply disruption in modern energy market history.
The worsening conflict has heightened fears of prolonged disruptions to global crude supply chains, driving oil prices sharply higher and increasing concerns over imported inflation across major economies.
The United States had launched and subsequently paused an operation dubbed “Project Freedom,” aimed at facilitating the safe passage of commercial vessels through the strait. Simultaneously, the U.S. military has maintained a blockade around Iran’s ports and coastline since mid-April in an attempt to pressure Tehran into accepting a diplomatic resolution.
On Friday, U.S. Central Command (CENTCOM) disclosed that American forces had fired upon and disabled two Iranian-flagged empty oil tankers attempting to enter an Iranian port in the Gulf of Oman. The military command also confirmed that another empty tanker had been disabled earlier in the week.
The update followed reports that U.S. naval forces had intercepted Iranian attacks targeting three American warships transiting the Strait of Hormuz. U.S. media outlet Fox News, citing a senior American official, reported that the U.S. retaliated by striking targets at Iran’s Qeshm port and the city of Bandar Abbas, both strategically positioned near the strait.
The flare-up in hostilities comes even as diplomatic negotiations remain underway. Iranian officials said Iran was still reviewing a new 14-point proposal aimed at ending the conflict and had yet to reach a final decision on the framework.
Trump, however, sought to downplay the severity of the latest military exchange. Speaking to ABC News, the U.S. president described the attacks as “just a love tap” and insisted that the ceasefire arrangement remained “in effect.”
He later adopted a more combative tone on social media, warning Tehran that Washington would respond with greater force if negotiations collapsed.
“We’ll knock them out a lot harder, and a lot more violently, in the future, if they don’t get their Deal signed, FAST!” Trump wrote.
Beyond geopolitics, investors were also digesting the latest U.S. labour market data, which showed resilience in employment despite mounting inflationary concerns linked to the conflict-driven surge in oil prices.
According to the U.S. Bureau of Labor Statistics, nonfarm payrolls increased by 115,000 jobs in April, surpassing economists’ expectations of 65,000. The unemployment rate remained unchanged at 4.3 percent.
Although the labour market data came in stronger than anticipated, analysts noted that the report also suggested mounting pressure on wage growth as higher energy prices filter through the broader economy.
Prior to the release of the payroll figures, traders had increasingly speculated that the Federal Reserve could resume interest rate hikes later this year to contain inflationary risks stemming from soaring crude prices and supply disruptions caused by the Middle East conflict.
However, expectations for additional tightening moderated after the jobs report, according to data from the CME FedWatch tool. Investors interpreted the figures as strong enough to avoid recession fears, but not sufficiently robust to force aggressive monetary tightening.
The U.S. dollar weakened following the release of the employment report, helping to boost gold prices further. A softer dollar generally benefits bullion by making gold less expensive for foreign investors holding other currencies.
Gold prices, despite Friday’s rebound, remain more than 10 percent below levels recorded before the Iran conflict intensified in late February.
Other precious metals also posted gains on Friday. Spot silver jumped 2.5 percent to $80.4125 per ounce, while platinum edged 0.2 percent higher to $2,065.70 per ounce.
