Gold heads for weekly drop as Gulf attacks reinforce rate-hike bets

Synopsis

Gold prices held steady early Friday as markets assessed inflation risks. Renewed rate-hike expectations are pushing the non-yielding metal toward a weekly decline. U.S. military infrastructure in Gulf states faced attacks after U.S. strikes on Iran. Markets now price in a higher chance of a September rate hike. Other precious metals also saw slight movements and are on track for weekly losses.

Gold steadied early on Friday as markets assessed risks of inflation stemming from the recent U.S.-Iran military escalation in the Middle East, with renewed rate-hike expectations putting the non-yielding metal on course for a weekly decline.

FUNDAMENTALS

Spot gold held its ground at $4,122.09 per ounce, as of 0047 GMT, and was headed for an over 1% weekly fall. U.S. gold futures for August ‌delivery were ⁠down 0.2% ⁠at $4,131.50.

Iranian armed forces launched attacks on U.S. military infrastructure in Gulf states on Thursday following U.S. strikes on Iran's southern coastal and eastern provinces, further eroding a three-week-old ceasefire.

The latest round of strikes has fuelled inflation concerns and reinforced the probability of the U.S. Federal Reserve raising interest rates this year. Markets are pricing in a 64% chance of a September rake hike from around 54% a ⁠week before, according ‌to CME's FedWatch tool.

Minutes from the Fed's June meeting, released earlier this week, showed growing concerns among policymakers about elevated inflation, with ⁠a few participants seeing a case for raising interest rates.

New York Fed President John Williams said on Thursday he did not expect energy prices to rise persistently for the rest of the year despite renewed hostilities in the Middle East.

The number of Americans filing new claims for unemployment benefits fell last week, suggesting the labor market remained stable despite a slowdown in job growth in June.

HSBC cut its average gold ‌price forecasts for 2026 and 2027 on Thursday, citing a hawkish shift in U.S. monetary policy expectations and a stronger dollar.

The National Bank of Poland (NBP) has 632.4 tons ⁠of gold reserves worth about 308 billion zlotys ($81.68 billion), NBP Governor Adam Glapinski said on Thursday.

Fortuna Mining expects to receive the final permit for its Diamba Sud gold project in Senegal within weeks, its chief executive told Reuters.

Elsewhere, spot silver eased 0.1% to $59.94 per ounce, platinum gained 0.2% to $1,614.22 and palladium added 0.4% to $1,252.75. All three metals were on track for a weekly loss.

DATA/EVENTS (GMT)

0300 China Overall Comprehensive Risk Q3

0300 Japan Overall Comprehensive Risk Q3

0600 Germany HICP Final YY June

0645 France CPI (EU Norm) Final MM, YY June

0645 France CPI YY, MM NSA June

0800 China Total Social Financing June

0800 China M2 Money Supply YY June

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