Gold Heads for Weekly Loss as Middle East Tensions Stoke Fed Rate Hike Fears

Gold prices were little changed in Friday trading but are on track for a weekly loss, as escalating geopolitical tensions in the Middle East fueled investor concerns over higher inflation and a potential U.S. interest rate hike.

Geopolitical Tensions Drive Market Jitters

Investor sentiment soured following a series of U.S. military attacks against Iran this week, which prompted retaliatory measures from Tehran and sent oil prices soaring. According to the source material, U.S. President Donald Trump declared that a ceasefire with Iran was over, heightening uncertainty in the region.

The surge in oil prices has ignited fears of significant energy-driven inflation. In response, markets have begun to price in a greater probability of a more hawkish stance from the Federal Reserve. Data from the CME Fedwatch tool reportedly showed an increase in bets on a Fed rate hike in 2026.

Impact on Precious Metals

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Higher interest rates typically weigh on non-yielding assets like gold, as they increase the opportunity cost of holding the metal compared to interest-bearing instruments. This pressure was reflected in gold's weekly performance.

• Spot gold was steady at $4,125.03 an ounce but was down approximately 1.6% for the week.
• Gold futures edged down 0.1% to $4,135.67 an ounce.

Other precious metals also faced weekly declines, according to the source. Spot silver, despite rising 0.5% on Friday to $60.2550 an ounce, was set for a 4.1% weekly drop. Spot platinum was poised for a 0.4% weekly loss, trading at $1,636.14 an ounce.