Gold prices are on track for a third straight weekly decline as investors shift their focus from easing geopolitical tensions to the Federal Reserve’s outlook on interest rates.
Spot gold fell more than 1% on Friday, pressured by a stronger US dollar and growing expectations that the Fed could keep interest rates higher for longer. Higher rates tend to reduce the appeal of gold because the metal does not generate interest.
Earlier this week, hopes that a US-Iran peace deal could reduce tensions in the Middle East briefly supported market sentiment. However, those gains faded after the Fed signaled it remains focused on fighting inflation, overshadowing optimism from the diplomatic developments.
While geopolitical uncertainty usually boosts demand for safe-haven assets like gold, investors are now paying closer attention to monetary policy. Markets have increased their expectations for another Fed rate hike later this year, helping lift the dollar and putting additional pressure on bullion prices.
For now, gold remains caught between two competing forces: global geopolitical risks that support prices and a hawkish Federal Reserve that continues to weigh on the precious metal.
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