– Gold headed for its first weekly drop in three, as a slight easing of geopolitical tensions in the Middle East sapped haven demand and a Federal Reserve inflation warning raised the prospect of fewer rate cuts.
Bullion fell 0.5% to trade near $3,353 an ounce on Friday, and is down more than 2% for the week. US President Donald Trump will decide whether to join Israel’s attacks on Iran within two weeks, his spokeswoman said, reducing fears of imminent action that could escalate hostilities, threaten energy flows and spur inflation.
The easing of tensions came after Fed Chairman Jerome Powell earlier in the week flagged inflation risks due to the impacts of Trump’s tariff agenda. That could make it tougher for the central bank to lower borrowing costs, something that would be a negative for gold, an asset which doesn’t pay interest and performs better in a lower-rate environment.
The precious metal is still up by more than a quarter this year, and remains not far below the record just above $3,500 set in April. However, there have been some signs this week that investors are favoring platinum as a haven play given bullion’s elevated levels.
Major Wall Street banks have diverged over whether gold can continue its record-setting rally. Goldman Sachs Group Inc. reaffirmed a $4,000-an-ounce forecast by next year, while Citigroup Inc. said it saw prices dipping below $3,000 in 2026. Spot gold dipped 0.5% to $3,353.59 an ounce at 10:51 a.m. in Singapore. The Bloomberg Dollar Spot Index declined 0.1%, but is still higher on the week. Silver and platinum fell, while palladium was little changed.
