Gold Prices Fall 0.49% as Fed Rate Hike Expectations Weigh on Markets
LONDON — Gold prices edged lower on Friday, heading for a weekly decline as escalating US-Iran tensions pushed oil prices higher and reinforced expectations that the Federal Reserve could keep interest rates elevated for longer.
Spot gold fell 0.49 percent to $4,111.68 per ounce, while US gold futures for August delivery declined 0.47 percent to $4,121.50.
In the UAE, 24‑carat gold dropped by AED1.50 to AED495.75, with other carat rates also moving lower.
Rising Oil Prices and Inflation Concerns
Gold came under pressure as renewed military exchanges between the United States and Iran drove oil prices higher, raising concerns that energy‑driven inflation could delay interest rate cuts or even prompt further policy tightening. Iranian forces launched attacks on US military infrastructure in Gulf states on Thursday following US strikes on Iran’s coastal provinces.
The rise in oil prices has increased expectations that inflation could remain elevated, reinforcing the likelihood that the Federal Reserve will maintain a tight monetary policy stance.
Fed Rate Expectations
According to CME’s FedWatch Tool, markets are now pricing in a 63 percent probability of a September interest rate hike, up from around 54 percent a week earlier. Higher interest rates generally reduce the appeal of gold, as the precious metal does not generate interest or dividend income, making yield‑bearing assets more attractive.
Minutes from the Federal Reserve’s June policy meeting, released earlier this week, also highlighted growing concern among policymakers over persistent inflationary pressures, further supporting expectations that borrowing costs could remain elevated.
Other Precious Metals
Elsewhere, spot silver rose 0.10 percent to $60.26 per ounce, platinum advanced 1.22 percent to $1,632.16, and palladium gained 1.71 percent to $1,251.00. Despite Friday’s gains, all three metals remained on track for weekly losses.
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