Gold prices moved slightly higher on Friday but remained on track for a weekly drop, as a stronger U.S. dollar and rising Treasury yields offset the metal’s traditional appeal as a safe haven despite ongoing tensions in the Middle East.
At 04:35 ET (09:35 GMT), spot gold rose 0.4% to $5,101.35 per ounce, while gold futures gained 0.6% to $5,110.14 per ounce.
Even with Friday’s modest rebound, bullion was poised to fall by more than 3% over the week, pressured by the dollar’s recent strength and fading expectations that the Federal Reserve will cut interest rates in the near term.
Iran conflict keeps investors cautious
The Middle East conflict entered its seventh day on Friday with no clear indication that hostilities are easing, keeping global financial markets unsettled.
Military tensions involving the United States, Israel and Iran have intensified in recent days, with missile launches and retaliatory strikes spreading across the region and raising concerns about potential disruptions to global energy supply.
U.S. President Donald Trump said he wanted a role in deciding Iran’s next leader once the war ends, remarks that underscored heightened uncertainty over the region’s political future.
Gold often benefits from geopolitical instability and a lower interest rate environment. However, the metal has struggled to build sustained gains this week as higher bond yields and a stronger dollar reduced investor appetite.
Dollar strength and policy outlook cap gains
The U.S. Dollar Index is heading toward a weekly rise of around 1.5%.
Oil prices, meanwhile, are set to climb more than 18% this week as the conflict threatens key energy infrastructure and shipping lanes in the Gulf. The surge in crude has renewed concerns about a fresh wave of global inflation.
This development has complicated the outlook for central banks, including the U.S. Federal Reserve. Higher energy costs tend to feed into broader inflation, potentially making policymakers more cautious about lowering interest rates in the near future.
Investors are now awaiting the U.S. February nonfarm payrolls report later on Friday, which may provide further clues about the strength of the labor market and the likely path of monetary policy.
A stronger-than-expected result could reinforce the view that the Federal Reserve has room to postpone any interest rate cuts.
LME copper inventories climb sharply
Among other precious metals, silver rose 1.9% to $83.778 per ounce, while platinum added 0.8% to $2,147.35 per ounce.
Benchmark copper futures on the London Metal Exchange slipped 0.1% to $12,919.00 per ton, while U.S. copper futures increased 0.4% to $5.8320 per pound.
Copper inventories tracked by the LME surged nearly 8% on Thursday, reaching their highest level in 16 months.
“The inventory build reflects strong inflows into LME warehouses, driven by shifting regional pricing incentives. LME copper has been trading at only a narrow premium to Comex, reversing last year’s structure that encouraged metal to flow into US warehouses. As these pricing signals normalise, metal is increasingly being redirected back into global exchange stocks,” said analysts at ING, in a note.
“The inventory surge creates a tougher near term backdrop for prices,” ING added.
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