Gold rose slightly on Friday, trading around $5,110 per ounce, but it was on track for its first weekly decline in five weeks. A stronger U.S. dollar and rising Treasury yields weighed on the metal, offsetting safe-haven demand triggered by ongoing Middle East tensions.
The U.S.-Israeli conflict with Iran entered its seventh day, with Iranian missiles and drones striking a refinery in Bahrain and Israel continuing airstrikes on Tehran. In response to the escalating situation, the U.S. temporarily suspended operations at its embassy in Kuwait.
While geopolitical risks typically boost gold as a safe haven, gains were limited this week as the U.S. dollar strengthened and Treasury yields rose, making non-yielding assets like gold less attractive.
At the same time, recent U.S. economic data pointed to continued momentum, with lower jobless claims, stronger productivity, and faster-than-expected services sector growth. These developments have shifted market expectations, leaving investors pricing in just one Federal Reserve rate cut this year, down from two anticipated earlier.
Even with Friday’s small advance, gold is likely to end the week slightly lower, marking a pause in a streak of rising prices over the past month. The combination of geopolitical uncertainty, inflation concerns, and U.S. monetary policy continues to create a delicate balance for the precious metals market.
Traders will now watch closely how developments in the Gulf unfold and how global financial markets respond, as these factors will continue to shape gold’s direction in the near term.
