Gold Heads for Third Straight Weekly Loss as Hawkish Fed Outweighs Iran Ceasefire Optimism
Gold Prices Extend Decline Amid Stronger US Dollar and Hawkish Federal Reserve Outlook
Gold prices continued to slide during Asian trading on Friday and remained on track for a third consecutive weekly loss, as a stronger U.S. dollar and the Federal Reserve’s hawkish policy outlook overshadowed support from a temporary peace agreement between Washington and Tehran.
Spot gold fell 1.8% to $4,134.86 per ounce as of 09:40 WIB, while U.S. gold futures for August delivery declined 2.2% to $4,152.25 per ounce.
The precious metal is now heading for a weekly decline of approximately 2%. Gold initially surged earlier in the week on optimism surrounding the U.S.-Iran peace deal, but sentiment weakened significantly following the Federal Reserve’s latest policy meeting.
Federal Reserve Signals Higher Rates for Longer
Market pressure intensified after nine of the Federal Reserve’s 19 policymakers projected at least one additional interest rate hike before the end of the year. The outlook reinforced expectations that borrowing costs could remain elevated for an extended period.
Although the Fed left interest rates unchanged on Wednesday, comments from Chair Kevin Warsh were widely interpreted as strongly hawkish. The remarks pushed U.S. Treasury yields higher and lifted the U.S. dollar to its strongest level in more than a year.
The U.S. Dollar Index remained largely unchanged during Asian trading after surging 0.8% on Thursday, reaching its highest level since May 2025.
A stronger dollar makes dollar-denominated gold more expensive for overseas buyers, while higher interest rates increase the opportunity cost of holding non-yielding assets such as gold.
According to futures market pricing, investors now see more than an 80% probability of a Federal Reserve rate hike before year-end.
Middle East Peace Talks Uncertainty Adds Pressure to Gold Market
Gold’s weakness was further amplified after Switzerland announced that negotiations for a final agreement to end the Middle East conflict would not take place on Friday as previously anticipated.
Reports indicated that U.S. Vice President J.D. Vance suspended plans for talks in Geneva, raising concerns about the durability of the recently announced temporary agreement.
The ceasefire arrangement had been expected to facilitate the reopening of key shipping routes through the Strait of Hormuz and contributed to a sharp decline in oil prices earlier this week.
However, crude oil prices rebounded on Friday, reigniting inflation concerns and adding another layer of uncertainty for financial markets.
Silver, Platinum, and Copper Prices Also Move Lower
Other precious metals also posted notable losses. Silver prices dropped 2.5% to $64.09 per ounce, while platinum declined 1.4% to $1,674.51 per ounce.
In the industrial metals market, benchmark copper futures on the London Metal Exchange fell 0.9% to $13,582.33 per metric ton. U.S. copper futures also weakened, slipping 1% to $6.30 per pound.
Outlook for Gold
Gold remains vulnerable to further downside pressure as investors reassess expectations for U.S. monetary policy and monitor developments surrounding Middle East peace negotiations. With the Federal Reserve maintaining a hawkish stance and the U.S. dollar trading near multi-year highs, the precious metal may continue to face headwinds despite ongoing geopolitical uncertainties.