Gold held largely steady on Friday, unchanged at $4,789.67 per ounce as of 0229 GMT, but remained up 0.9% for the week and is on track for its fourth consecutive weekly gain, according to AFP. US gold futures for June were steady at $4,809.30, demonstrating continued bullish momentum in the precious metals market. The precious metal maintained its position despite some volatility in the previous session.
The gold rally is being supported by hopes for a US-Iran peace deal that has eased fears of higher inflation and elevated interest rates, as reported by AFP. A 10-day ceasefire between Lebanon and Israel went into effect on Thursday, while US President Donald Trump said the next meeting between the United States and Iran may take place over the weekend. Market analysts suggest that any progress in US-Iran negotiations could further calm oil markets and inflation fears, potentially unlocking more upside for gold. "Investors are now watching closely for concrete progress in U.S.-Iran negotiations. Any progress or extension of the current fragile ceasefire could further calm oil markets and inflation fears, potentially unlocking more upside for gold," said Tim Waterer, chief market analyst at KCM Trade.
The US dollar firmed after hitting a six-week low in the last session, but was headed for a second weekly drop, making greenback-denominated commodities more affordable for holders of other currencies, according to AFP. Oil prices fell, easing fears of higher inflation on optimism that the Iran war could be nearing an end. Concerns that higher energy prices could stoke inflation and keep global interest rates higher for longer have driven down gold prices by more than 8% since the Iran war began in late February. While gold is considered an inflation hedge, higher interest rates crimp demand for the non-yielding asset.
Traders now see a 27% chance of a 25-basis-point Federal Reserve interest rate cut in December, as reported by AFP. Before the war, there were expectations of two reductions for this year. While gold is considered an inflation hedge, higher interest rates crimp demand for the non-yielding asset, creating a complex dynamic in the current market environment. "While we expect further downside pressure (on gold) as the year progresses, ongoing geopolitical risks are likely to keep prices supported above a firm floor of $3,500/oz, underpinned by gold's safe-haven characteristics," said BMI, a unit of FitchSolutions.
Spot silver eased 0.2% to $78.26 per ounce but was headed for a fourth straight weekly gain, according to CNBC. Platinum lost 0.5% to $2,075.30, while palladium was up 0.1% at $1,552.91. Both metals were on track for a third straight weekly gain, showing continued strength across the precious metals complex despite some volatility in individual prices.
