Global gold prices slipped on Friday and were headed for a weekly loss as escalating tensions in the Middle East heightened inflation concerns and strengthened expectations that interest rates could remain elevated for longer. Spot gold fell around 0.2% to trade near $4,464 per ounce, while U.S. gold futures also declined, reflecting cautious investor sentiment.
Market analysts say renewed geopolitical uncertainty has pushed oil prices higher, raising fears of persistent inflation. The ongoing conflict and stalled diplomatic efforts in the region have fueled concerns about disruptions to global energy supplies, particularly through the strategically important Strait of Hormuz. Brent crude prices have risen this week, adding pressure on inflation outlooks worldwide.
Higher inflation expectations have increased speculation that the U.S. Federal Reserve may keep borrowing costs elevated or even consider additional rate hikes later this year. According to market estimates, traders are now pricing in a growing possibility of a Federal Reserve rate increase before the end of 2026. Higher interest rates generally reduce the appeal of gold because the precious metal does not offer interest income.
Investors are also closely watching the release of U.S. nonfarm payrolls data, which could provide fresh clues about the strength of the economy and the future path of monetary policy. Strong employment figures could reinforce expectations of tighter monetary conditions, adding further pressure on bullion prices.
Meanwhile, physical gold demand remained subdued in major markets such as India and China, where buyers stayed cautious amid price volatility. Other precious metals, including silver, platinum, and palladium, also recorded declines and were on track for weekly losses.