Gold Retreats as Oil Surge Rekindles Fed Tightening Fears

Key Moments

Gold Slides, Poised for Weekly Loss

Gold prices weakened on Friday and were heading toward a weekly loss as a sharp rise in oil prices and worsening geopolitical frictions between the United States and Iran intensified worries that persistent inflation could keep the Federal Reserve inclined toward tighter monetary policy.

Spot gold fell about 0.6% to $4,100.34 an ounce, while gold futures slipped 0.8% to $4,108.90/oz by 09:46 ET (13:46 GMT). Spot prices were down about 2% over the week.

Geopolitics, Oil, and Rate Expectations Pressure Bullion

Gold came under pressure after the United States launched a series of attacks against Iran during the week, a move that pushed oil prices sharply higher.

U.S. President Donald Trump declared that a ceasefire with Iran was over, and ordered more attacks against the country, drawing retaliatory measures from Tehran.

Although an Axios report indicated that regional mediators were trying to preserve a recent U.S.-Iran memorandum of understanding, the outlook for stability in the Middle East remained highly uncertain.

The spike in oil prices stoked concerns over renewed energy-driven inflation, raising the risk that the Federal Reserve could adopt a more hawkish stance. According to CME Fedwatch, markets steadily increased wagers on a Fed rate hike in 2026 over the course of the week.

Higher interest rates are typically negative for non-yielding assets such as gold, as they increase the opportunity cost of holding bullion instead of interest-bearing securities.

Analyst View: Limited Haven Bid Despite Conflict

“Gold found some support on expectations of limited escalation in the Middle East conflict. This is despite earlier concerns that a rebound in energy prices could see the Fed keeping interest rates higher for longer to combat stubbornly high inflation,” ANZ analysts wrote in a note.

Gold has generally struggled to perform as a safe-haven asset since the start of the U.S.-Iran war, with persistent worries about sticky inflation and interest rates outweighing its traditional role as a hedge during periods of geopolitical stress.

Mixed Moves Across Precious Metals

Price action in other precious metals was uneven over the week.

Spot silver declined 0.43% to $59.6995/oz on Friday and was down more than 4% for the week. In contrast, spot platinum rose 0.58% to $1,626.85/oz and outperformed its peers on a weekly basis, posting a comparatively modest 0.3% drop.