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Gold prices slipped to their lowest levels in nearly four weeks during Asian trading on Friday, as the ongoing ceasefire between Israel and Iran weakened demand for the precious metal, traditionally considered a safe-haven asset during times of geopolitical unrest.
Spot gold fell 1% to $3,293.79 an ounce, its lowest level since June 2. Meanwhile, gold futures for August dropped 1.2% to $3,306.70/oz at 01:15 ET (05:15 GMT), marking a second consecutive weekly loss for the yellow metal. The recent decline of nearly 6% from its record high in late April has raised concerns about further pressure on gold prices.
Israel-Iran Truce Eases Geopolitical Tensions
The ceasefire between Israel and Iran, brokered by U.S. President Donald Trump, has largely held through Thursday, alleviating some of the geopolitical risk that had previously driven demand for safe-haven assets like gold. With the immediate threat of further conflict between the two nations subsiding, investors have shifted focus toward economic data, particularly inflation measures.
Investors Await U.S. Inflation Data
Market attention has now turned to the release of the Personal Consumption Expenditures (PCE) price index for May, the Federal Reserve’s preferred gauge of inflation, which is due later on Friday.
The consensus forecast is for a steady 0.1% monthly increase in both the headline and core PCE readings. On a yearly basis, the headline PCE is expected to rise by 2.3%, while the core PCE, which excludes volatile food and energy prices, is forecast to increase by 2.6%. These figures are anticipated to be above last year’s readings and could provide insight into the Fed’s stance on future interest rate policy.
Powell Faces Criticism from Trump
Earlier this week, Federal Reserve Chair Jerome Powell testified before Congress, expressing caution about lowering interest rates too soon. Powell warned that inflation caused by tariffs could prove more persistent than initially anticipated, leading to concerns that inflation could become entrenched.
In response to Powell’s caution, President Donald Trump sharply criticized the Fed Chair and said he was considering replacing him with one of several potential candidates. Reports suggest that Trump could name Powell’s replacement as early as September, further adding to the uncertainty surrounding future Fed policy.
Metal Markets Decline, Dollar Strengthens
As the U.S. dollar ticked up by 0.1% during Asian hours, the price of gold and other metals continued to face pressure. A stronger dollar makes commodities priced in the greenback more expensive for foreign buyers, thus reducing demand. The U.S. Dollar Index remains near a three-year low, but its recent uptick has affected demand for precious metals.
Platinum futures dropped 1.3% to $1,392.00 an ounce, pulling back from a more than decade-high reached earlier in the week. Despite the drop, platinum remains up 32% for the month, driven by strong demand and tightening supply.
Silver futures fell 0.6% to $36.375 per ounce, while copper futures were mixed. Benchmark copper futures on the London Metal Exchange declined 0.2% to $9,891.15 per ton, while U.S. copper futures edged up slightly by 0.1% to $5.06 per pound.
Looking Ahead
As markets continue to monitor geopolitical developments, attention now shifts toward economic data and the Federal Reserve’s stance on interest rates. Any significant changes in inflation or monetary policy could further influence the direction of gold and other precious metals in the coming weeks.
In summary, the combination of easing geopolitical tensions, a steady U.S. dollar, and investor anticipation of key inflation data has put gold prices under pressure. However, with ongoing concerns over tariffs and inflationary pressures, investors will continue to weigh these factors in shaping market sentiment.
