Gold prices moved slightly higher during Asian trading on Friday, but the metal remained on track for a second consecutive weekly loss as investors weighed the inflation risks tied to the ongoing U.S.-Israel conflict with Iran.
Bullion received some support after both the U.S. dollar and crude oil paused their recent rallies, particularly after Washington announced additional waivers allowing certain purchases of Russian crude in an effort to ease supply disruptions linked to Iran.
By 01:14 ET (05:14 GMT), spot gold had gained 0.6% to $5,109.46 per ounce, while gold futures slipped 0.3% to $5,111.84 per ounce.
Gold on course for weekly decline while trading in a tight range
Spot gold was set to fall about 1.2% over the week, marking its second straight weekly drop.
Although the precious metal attracted some safe-haven demand as geopolitical tensions in the Middle East intensified, its upside remained limited by growing fears that inflation could stay elevated.
Investors are concerned that the Iran conflict may keep oil prices high for an extended period, which could fuel global inflation and push major central banks toward a more hawkish policy stance.
This outlook has gradually reduced expectations for near-term interest rate cuts by the Federal Reserve. The central bank is widely expected to keep borrowing costs unchanged when policymakers meet next week.
Since the beginning of the Iran conflict, gold has largely traded within a $5,000–$5,200 per ounce range. While the metal is still higher for the year overall, its momentum has weakened after retreating from a record peak close to $5,600 per ounce reached in late January.
Analysts at ANZ said in a research note that despite recent pressures, gold continues to serve “a key portfolio diversifier, providing protection against a broad range of macro and geopolitical uncertainties.”
Other precious metals also posted gains on Friday but remained relatively subdued over the course of the week. Spot silver climbed 0.7% to $84.3275 per ounce, while spot platinum added 0.5% to $2,143.21 per ounce.
Markets await PCE inflation data for further signals
Investors are now turning their attention to the upcoming release of the U.S. personal consumption expenditures (PCE) price index, which could provide further clues about the outlook for the world’s largest economy.
The measure is the Federal Reserve’s preferred gauge of inflation and is expected to play a role in shaping interest rate expectations.
However, the data reflects conditions in January, meaning it is unlikely to capture any inflationary impact linked to the recent surge in energy prices.
The PCE report will arrive only days before the Federal Reserve’s next policy meeting, where officials are widely expected to keep rates unchanged. Data from CME FedWatch indicates that markets currently anticipate rates will remain steady until at least September.
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