Quick overview

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The bullion asset headed for its first weekly decline in three weeks as a Federal Reserve inflation warning increased the likelihood of fewer rate cuts, and a slight defusing of Middle East geopolitical tensions drained haven demand. Bullion dropped 0.5 percent to close at $3,353 an ounce on Friday, giving it a weekly decline of over 2 percent.

President Donald Trump will decide within two weeks whether to join Israel’s attacks on Iran, which jeopardize energy supplies and increase inflation. Tensions subsided after Fed Chairman Jerome Powell warned earlier in the week that Trump’s tariff agenda would have an impact on inflation.

XAU/USD is an asset that doesn’t generate interest and typically performs better in low-interest-rate environments. It may struggle if the central bank faces challenges in lowering borrowing costs.

The precious metal is still up more than 25% this year and remains close to the April record of just over $3,500. However, given the high levels of bullion, there have been indications this week that investors favor platinum as a haven play.

Major Wall Street banks have expressed differing opinions regarding whether gold can sustain its record-breaking rally. Goldman Sachs. reiterated a prediction of $4,000 per ounce by the following year, while Citigroup Inc. claimed prices would fall below $3,000 in 2026. At $3,354 per ounce, spot gold fell 0.5 percent. Despite a 0.1 percent decline, the Bloomberg Dollar Spot Index is still up for the week. Palladium marginally changed, but silver and platinum declined.