Gold Prices Fall Amid Iran Tensions as US Payroll Data Takes Center Stage
Gold prices declined during Asian trading on Friday as fading hopes for a US-Iran peace agreement fueled concerns over higher inflation and tighter monetary policy, driving investors toward the US dollar.
Market attention is now focused on the upcoming US payrolls report for further clues about the health of the world’s largest economy and the direction of interest rates this year.
Spot gold fell 0.8% to US$4,440.84 per ounce at 10:45 a.m., while gold futures also slipped 0.8% to US$4,467.01 per ounce.
Gold prices are heading toward a weekly loss as geopolitical tensions involving Iran and expectations of higher interest rates continue to weigh on investor sentiment. Spot gold is projected to record a weekly decline of around 2.2%, marking its worst performance since early May.
The precious metal came under pressure after signs emerged of worsening geopolitical tensions in the Middle East. The United States and Iran reportedly launched new attacks against each other amid reports that Tehran had withdrawn from nuclear negotiations.
Hopes for a broader peace deal weakened further after Iran-backed Hezbollah in Lebanon rejected a ceasefire agreement with Israel, while hostilities in southern Lebanon continued to escalate. Tehran had previously stated that a ceasefire in Lebanon was a key condition for any wider regional peace agreement.
This week’s developments highlighted limited progress toward peace negotiations, increasing concerns about a prolonged US-Iran conflict that could continue supporting oil prices and inflationary pressures.
Rising inflation is expected to encourage global central banks, particularly the Federal Reserve, to maintain a hawkish stance on interest rates. Higher interest rates typically reduce the appeal of non-yielding assets such as gold, placing additional pressure on bullion prices since the escalation of the US-Israel conflict with Iran in late February.
