Quick overview

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Gold is heading for its steepest weekly decline in six years, pressured by the escalation of the Middle East conflict, which has driven energy prices higher and reduced expectations for interest rate cuts by major central banks.

Gold futures traded near $4,689 per ounce on Friday, up 1.48% on the day but down 7.4% for the week — the sharpest weekly loss since March 2020. In the spot market, gold was quoted at $4,687.57.

On Thursday, the metal posted its seventh consecutive daily decline, marking its longest losing streak since October 2023. Gold has been under sustained pressure since the United States and Israel launched attacks on Iran late last month.

Why gold is falling

The surge in oil and gas prices driven by the conflict has reignited inflation concerns, limiting central banks’ ability to ease monetary policy. For gold — a non-yielding asset — this environment is particularly unfavorable.

The correction has been exacerbated by rising U.S. Treasury yields and a stronger dollar, while investors have been liquidating gold holdings to cover losses in other asset classes. Gold-backed ETFs have also recorded outflows, signaling weak demand for safe-haven exposure.

In this context, the Federal Reserve held interest rates unchanged at its midweek meeting, in line with market expectations. Fed Chair Jerome Powell emphasized that policymakers will need to see tangible progress on inflation before resuming the path toward monetary easing.

Other precious metals have also come under pressure. Silver fell below $72.06 per ounce, posting a weekly decline of nearly 12%, while palladium and platinum are also on track for negative weekly closes.