Stronger Dollar Keeps Precious Metal on Track for Weekly Loss
Gold prices continued to weaken on Friday, putting the precious metal on course for a third consecutive weekly decline as investors focused on the prospect of higher U.S. interest rates and a stronger dollar.
Spot gold fell 1.8% to $4,134.86 an ounce, while August gold futures dropped 2.2% to $4,152.25. The metal is now set to end the week roughly 2% lower.
Although gold benefited earlier in the week from optimism surrounding the temporary agreement between the United States and Iran, those gains faded after the Federal Reserve signalled that monetary policy could remain restrictive for longer than markets had anticipated.
Markets Price in Greater Chance of Another Rate Increase
The Federal Reserve kept benchmark interest rates unchanged this week, but policymakers delivered a message that investors interpreted as increasingly hawkish.
Nine of the central bank’s nineteen policymakers expect at least one additional rate increase before the end of the year, reinforcing expectations that borrowing costs may stay elevated well into 2026.
Comments from Fed Chair Kevin Warsh helped push Treasury yields higher and lifted the U.S. dollar to its strongest level in more than a year. The U.S. Dollar Index remained near those highs after surging 0.8% during the previous session.
The stronger dollar and higher bond yields continue to weigh on gold, which does not generate interest income and becomes less attractive when competing assets offer higher returns.
Market pricing currently suggests an over 80% probability of another Fed rate increase before year-end.
Delayed Iran Talks Add Fresh Uncertainty
Investor sentiment was also influenced by reports that negotiations aimed at finalising a broader agreement between Washington and Tehran had been postponed.
Switzerland confirmed that talks scheduled for Friday would not take place, while reports indicated that U.S. Vice President J.D. Vance had suspended his participation in the planned discussions.
The setback has raised questions about how durable the interim agreement may prove to be, even though the deal remains in place for now.
Oil Rebounds but Remains Near Multi-Month Lows
While crude oil prices recovered modestly on Friday, they remain sharply lower for the week following expectations that the Strait of Hormuz could gradually reopen to normal shipping traffic.
The decline in energy prices has eased inflation concerns, reducing some of the safe-haven demand that had previously supported gold.
Broader Metals Complex Also Moves Lower
Other precious metals also came under pressure, with silver falling 2.5% to $64.09 an ounce and platinum losing 1.4% to $1,674.51.
Copper prices weakened as well, with London Metal Exchange copper futures falling 0.9% and U.S. copper futures declining 1%, reflecting broader caution across commodity markets.
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