Gold is heading for its first weekly price drop in three weeks, as a slight easing of geopolitical tensions in the Middle East weakened demand for the safe haven asset, and US Federal Reserve warnings about inflation increased the likelihood of fewer rate cuts, UNN reports citing Bloomberg.
Details
Bullion fell 0.5% to about $3,353 an ounce on Friday and is down more than 2% for the week.
US President Donald Trump will decide on joining Israel's attacks on Iran within two weeks, his press secretary said, reducing concerns about imminent actions that could escalate hostilities, jeopardize energy supplies and fuel inflation.
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The easing of tensions came after Fed Chair Jerome Powell earlier in the week outlined inflation risks from the consequences of Trump's tariff agenda. This could make it more difficult for the central bank to lower borrowing costs, which would negatively affect gold – an asset that pays no interest and performs better in an environment of low rates.
The precious metal is still up more than a quarter this year and remains not far below the record of just over $3,500 set in April.
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However, this week there were some signs that investors are favoring platinum as a safe haven asset given the high prices for bullion.
Spot gold fell 0.5% to $3,353.59 an ounce at 10:51 a.m. in Singapore. The Bloomberg Dollar Spot Index fell 0.1%. Silver and platinum declined, while palladium was little changed.
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Major Wall Street banks disagree on whether gold can continue its record rally. Goldman Sachs Group Inc. maintained its forecast of $4,000 an ounce by next year, while Citigroup Inc. said it expects prices to fall below $3,000 in 2026.