Gold Struggles for Direction as Oil and Dollar Rise

Key Moments

Gold Edges Higher but Heads for Weekly Loss

Gold prices advanced on Friday but remained on course for a weekly decline, as uncertainty surrounding U.S.-Iran peace efforts kept markets focused on rising oil prices, inflation risks, and the prospect of interest rates staying elevated for longer.

By 08:31 ET (12:31 GMT), spot gold had risen 0.3% to $4,707.43 per ounce, while futures contracts for the metal were broadly unchanged at $4,724.11 per ounce.

Across the past one-week period, spot gold has retreated 2.6%, and gold futures have dropped 3.2%, underscoring the metal’s struggle to gain traction amid shifting macroeconomic drivers.

Oil Rally Fuels Inflation and Rate Concerns

Oil prices pulled back from earlier intraday gains on Friday but still traded above $100 a barrel. Market participants remained wary of a potentially extended U.S.-Iran conflict after President Donald Trump remarked that he was in no hurry to bring the war to an end.

Both the global and U.S. crude benchmarks were poised for what would be their largest weekly advance since early-March, reinforcing fears that higher energy costs could intensify overall price pressures.

These developments have revived expectations that central banks may consider additional interest rate hikes to counter inflation. Such an environment typically weighs on non-yielding assets like gold, which can lose relative appeal when borrowing costs climb.

Middle East Uncertainty and Inflation Outlook

Market commentary continued to highlight the lack of a clear path forward in the Middle East and the potential implications for inflation.

“Clarity over the next phase in the Middle East conflict is in short supply, and it now looks as though inflation pressures may be broadening,” analysts at ING said in a note.

Persistent geopolitical uncertainty in the region has heightened the risk that energy-driven price increases could extend beyond the near term, complicating policy decisions for central banks and shaping expectations for real yields, a key driver for gold.

Dollar Firmness Adds Pressure on Bullion

In parallel, the U.S. dollar has attracted modest demand this week, creating an additional headwind for gold by making the metal more expensive for buyers using other currencies.

A measure tracking the greenback against a basket of major currency peers was last seen trading roughly flat, but the recent upward bias in the dollar has nonetheless tempered the appeal of dollar-denominated bullion for overseas investors.