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Gold prices moved lower on Friday and remained on track for a weekly loss as escalating tensions between the United States and Iran boosted oil prices, reinforcing concerns that inflation could remain elevated and delay future interest rate cuts.

Silver and platinum were also heading for weekly declines, while the U.S. dollar steadied after last week’s weakness and crude oil continued to trade at elevated levels.

By 04:46 ET (08:46 GMT), spot gold had fallen 0.6% to $4,101.11 an ounce, while gold futures were down 0.8% at $4,108.90 an ounce. Spot prices have declined approximately 1.8% since the beginning of the week.

Oil Rally Revives Interest Rate Fears

The precious metal came under renewed pressure after U.S. military strikes against Iran pushed oil prices sharply higher.

President Donald Trump declared the ceasefire with Iran over and authorised additional military operations, prompting retaliatory action from Tehran.

Although Axios reported that regional mediators continue efforts to preserve the recent U.S.-Iran memorandum of understanding, uncertainty surrounding the conflict remains elevated.

The rise in crude prices has revived fears that energy-driven inflation could keep the Federal Reserve on a more hawkish path. CME FedWatch data showed that markets have increased expectations for a U.S. rate hike in 2026.

Higher interest rates typically reduce demand for gold because the metal offers no yield, making fixed-income investments comparatively more attractive.

“Gold found some support on expectations of limited escalation in the Middle East conflict. This is despite earlier concerns that a rebound in energy prices could see the Fed keeping interest rates higher for longer to combat stubbornly high inflation,” ANZ analysts wrote in a note.

Despite heightened geopolitical tensions, gold has failed to outperform as a traditional safe-haven asset, with inflation concerns continuing to outweigh defensive buying.

Other Precious Metals Also Weaken

Silver and platinum also ended the week on a weaker note.

Spot silver declined 0.7% to $59.5250 an ounce and has lost more than 4% over the week.

Spot platinum edged 0.1% lower to $1,616.14 an ounce, limiting its weekly decline to around 0.3% and outperforming the broader precious metals complex.

Oil prices were broadly unchanged on Friday, with both Brent and WTI remaining on course for healthy weekly gains as markets continued to assess renewed hostilities between the United States and Iran while betting that the conflict will not significantly disrupt crude exports from the Persian Gulf.

At 14:18 ET (18:18 GMT), U.S. West Texas Intermediate (WTI) crude futures slipped 0.1% to $72.01 a barrel, while Brent crude futures edged 0.07% lower to $76.25 a barrel.

Although prices eased slightly during Friday’s session, Brent was still set to finish the week around 5% higher and WTI roughly 4% higher after attacks near the Strait of Hormuz briefly reignited supply concerns. Those fears have since moderated as investors increasingly expect the latest military confrontation to remain contained.

Shipping Risks Continue to Drive Market Attention

Thursday saw another round of U.S. airstrikes against Iranian military positions, with Washington saying the operation was intended to reduce threats to commercial shipping in the Strait of Hormuz.

Iran responded by launching missile and drone attacks against U.S.-aligned nations, including Bahrain, Kuwait, Qatar and Jordan, in one of the largest military exchanges since the temporary agreement reached last month.

The escalation followed attacks on commercial vessels earlier this week that prompted some shipping companies to postpone or reconsider voyages through the Strait of Hormuz. While tanker traffic has improved since the June agreement reopened the passage, shipping activity remains below normal as insurers and operators continue to evaluate regional security risks.

President Donald Trump said attacks on commercial vessels had effectively ended the ceasefire and warned that any further action against shipping would prompt a stronger U.S. response. At the same time, diplomatic talks continued, with Iranian Foreign Minister Abbas Araghchi meeting officials from Saudi Arabia, Oman and Turkey in an effort to contain the crisis.

Analysts See Limited Supply Risks for Now

Analysts at IG said in a note that oil’s relatively modest price reaction suggests investors believe the conflict is unlikely to develop into a broader regional war.

The brokerage noted that U.S. military operations have focused on Iranian military facilities rather than oil production or export infrastructure, while Gulf crude shipments have continued largely without interruption.

IG added that oil prices would likely move significantly higher only if the United States imposed tighter sanctions on Iranian crude exports or if the conflict directly affected energy infrastructure or shipping through the Strait of Hormuz.

For now, resilient exports and the continued movement of commercial vessels through the region are helping to limit additional price gains despite elevated geopolitical uncertainty.

Markets will continue monitoring military developments over the weekend, tanker movements and any signs of slowing crude exports from the Gulf.

European wholesale natural gas prices moved lower on Friday after shipping data showed that liquefied natural gas (LNG) cargoes continue to transit the Strait of Hormuz, easing immediate concerns over a major disruption to global supplies despite escalating tensions in the Middle East.

The benchmark Dutch front-month gas contract declined 2.3% to €48.97 per megawatt-hour (MWh), giving back part of the sharp gains recorded earlier in the week. In the UK, the equivalent front-month contract fell 2.4% to 117.90 pence per therm.

Although prices retreated during Friday’s session, both contracts remained on track to post a second consecutive week of gains as geopolitical developments continued to add a risk premium to energy markets.

LNG Shipping Activity Reassures Traders

The decline in gas prices came despite continued military tensions following the latest exchange of airstrikes between the United States and Iran. The breakdown of the 17 June ceasefire has heightened concerns over security around the Strait of Hormuz, one of the world’s most important energy shipping routes.

However, traders took comfort from live satellite tracking and shipbroking data showing that several LNG tankers departing from Qatar successfully passed through the waterway during the previous 24 hours without disruption.

While Iran has increased naval patrols and intensified vessel inspections in the area, commercial shipping has continued to operate, reducing fears of the severe supply interruption that markets had begun to anticipate.

Healthy European Storage Limits Price Impact

European gas markets have also been supported by strong storage levels, with inventories remaining comfortably above the seasonal average for July. The healthy stock position has helped cushion the market against short-term geopolitical uncertainty.

Even so, traders remain alert to further developments. A prolonged confrontation, direct disruption to LNG export infrastructure or a withdrawal of insurance cover for vessels travelling through the Persian Gulf could quickly reverse recent price declines and push European gas prices back above the €50 per MWh level.

Eurozone government bond yields were little changed on Friday as markets steadied following a sharp sell-off in the previous two sessions, driven by renewed concerns that escalating tensions between the United States and Iran could reignite energy-led inflation.

Germany’s benchmark 10-year Bund yield edged higher to 3.033%, remaining close to its highest level in seven weeks. The benchmark recorded its biggest two-day rise in several months on Wednesday and Thursday after heavy military exchanges between Washington and Tehran unsettled global markets.

The yield on Germany’s two-year government bond, which closely reflects expectations for European Central Bank (ECB) monetary policy, held around 2.63% after experiencing a similarly pronounced jump as investors moved away from safe-haven debt.

Inflation Fears Return to the Forefront

The latest escalation, which has raised concerns over the durability of the fragile ceasefire agreed on 17 June, followed U.S. strikes on Iranian targets and subsequent retaliation by Tehran against American assets in Kuwait and Bahrain.

Disruption to shipping through the Strait of Hormuz has fuelled a sharp rise in oil prices, with Brent crude climbing back towards $78 per barrel, prompting investors to reassess near-term inflation expectations.

Before this week’s geopolitical developments, bond markets had been pricing in the prospect of easing inflation and a more neutral approach from central banks. The renewed conflict has now cast doubt over that outlook, forcing investors to reconsider the likely path of monetary policy.

Shares of Watches of Switzerland Group Plc (LSE) dropped more than 3% on Friday after Jefferies lowered its recommendation on the luxury watch retailer to “hold” from “buy,” arguing that the scope for further valuation expansion has become more limited. At the same time, the broker increased its price target to 740 pence from 440 pence.

“Our downgrade to Hold reflects a reducing runway for valuation expansion (with today’s 13.1x cal 2027 PE comparing to a post COVID range of 7x to 14x) at a time when the US outlook will likely provide a reducing source of positive surprises,” Jefferies said.

North America Remains Strong, but Valuation Appeal Weakens

Jefferies expects the company’s full-year results, due on 14 July, to “confirm North American demand buoyancy,” although it believes “reducing valuation attractions and inflation tailwinds” justify a more cautious stance.

The broker said its revised target price reflects “the dichotomy of UK maturity (on c.10x) and US potential (on c.16x), the latter sense-checked by the correlation to volatile equity markets.”

Jefferies has also adopted a sum-of-the-parts valuation approach. Its previous target was based on a calendar 2026 price-to-earnings multiple of 10.3x, whereas the updated valuation rolls forward to 2027 earnings using a group multiple of 13.1x.

The revised methodology applies a 10x multiple to the UK business, which the broker said is “aligned with the average for FTSE250 retailers,” while assigning a 16x multiple to the U.S. operations.

U.S. Growth Expected to Moderate

Commenting on the American business, Jefferies described it as delivering “an impressive US re-acceleration, but an unclear outlook.” The broker highlighted fiscal 2025/26 U.S. revenue growth excluding foreign exchange effects of 22.7% before the impact of the 53rd week, supported by approximately 20% growth at Coin and a 2.4% contribution from the four-month consolidation of D&D.

Jefferies believes current market forecasts for U.S. revenue growth of around 14% in fiscal 2026/27 and 8.5% in fiscal 2027/28 “seems fair rather than too conservative,” compared with its own projections of 14.5% and 8%.

The broker also noted that “now started lapping the heightened US price hikes pushed since Liberation Day by major brands,” with cumulative price increases of 12.6% across Patek Philippe, Rolex, Cartier and Omega. It added that pricing support “has started moderating since Sep 2025,” highlighting that Patek Philippe reduced prices by a high-single-digit percentage in February.

UK Outlook Remains Challenging

Turning to the UK market, Jefferies said “despite extensive industry lobbying, no evidence has emerged of a potential reintroduction of duty-free shopping,” adding that recent political developments suggest such an outcome “is a very remote one within this Parliament.”

As a result, the broker believes the company remains exposed to “a mixed domestic demand outlook,” with the UK business expected to account for around 45% of group revenue by fiscal 2027/28, leaving it “vulnerable to a more pressured consumer.”

Jefferies forecasts revenue of £1.80 billion in fiscal 2025/26, rising to £1.97 billion in fiscal 2026/27 and £2.10 billion in fiscal 2027/28, compared with £1.65 billion in fiscal 2024/25. It expects earnings per share to increase from 41.6 pence in fiscal 2024/25 to 43.0 pence, 53.6 pence and 58.3 pence over the following three financial years.

According to the broker, risks to its valuation include lower product allocations from luxury watch brands, increased competition for acquisitions, the possibility of new U.S. tariffs and a shift in consumer spending away from the hard luxury segment.

St. James’s Place Plc (LSE:STJ) shares fell more than 6% in London trading on Friday following reports that Sovereign Wealth, one of the company’s largest partner firms, is in discussions about joining Swedish wealth management group Söderberg & Partners.

According to the report, Sovereign Wealth oversees approximately £3 billion in assets under management and has a network of more than 50 advisers, making it one of St. James’s Place’s most significant partner firms.

Quarterly Net Inflows Ease

The wealth manager previously reported net inflows of £1.53 billion for the quarter ended 31 March 2026, compared with £1.69 billion during the same period a year earlier.

The company said the lower inflows reflected a period of heightened market volatility and ongoing geopolitical uncertainty, as outlined in its results published on 29 April 2026.