Key Highlights
- Precious metal declined approximately 2% during Friday’s trading session, marking third straight weekly decline
- Federal Reserve Chair Kevin Warsh’s hawkish stance strengthened the dollar and lifted Treasury yields
- Nearly half of Fed officials anticipate at least one interest rate increase before year-end
- Temporary US-Iran diplomatic agreement provided short-lived support early in the trading week
- Suspension of Switzerland peace negotiations introduced fresh market uncertainty
The precious metal is experiencing its third consecutive weekly decline as mounting expectations for Federal Reserve interest rate increases and US dollar appreciation continue to pressure prices.
Bullion prices retreated approximately 1.8% to reach $4,134 per ounce on Friday. Futures contracts for US gold decreased 2.2% to settle at $4,152. The yellow metal is positioned to register a weekly loss of around 2%.
Prices had initially climbed earlier in the week following the announcement of an interim diplomatic agreement between Washington and Tehran. However, these advances quickly evaporated after the Federal Reserve’s policy announcement on Wednesday.
Central Bank Rhetoric Reshapes Market Sentiment
Federal Reserve Chair Kevin Warsh adopted a decidedly hawkish position during the policy meeting, triggering a rally in Treasury yields and propelling the US dollar to levels not witnessed since May 2025.
The US Dollar Index jumped 0.8% during Thursday’s session. Dollar strength increases the cost of gold for international purchasers using alternative currencies, thereby dampening overall demand.
Nine out of nineteen Federal Reserve policymakers currently project at least one rate elevation before the conclusion of 2025. Market-based futures instruments are now pricing in more than an 80% probability of a rate adjustment by year-end.
Elevated interest rates increase the opportunity cost associated with maintaining gold positions, since the metal generates neither interest income nor dividend payments. Christopher Wong, a strategist with Oversea-Chinese Banking Corp, noted that gold typically demonstrates weak performance ahead of initial rate increases.
Wong further observed that uncertainty remains regarding whether this would constitute an isolated precautionary measure or signal the beginning of a comprehensive tightening campaign. He suggested that gold could stage a recovery if the increase proves to be a standalone adjustment.
Diplomatic Progress Provides Insufficient Support
The provisional agreement between the United States and Iran was anticipated to restore commercial shipping operations through the Strait of Hormuz. Maritime traffic has started resuming passage through the critical waterway after US authorities declared the conclusion of their blockade.
Nevertheless, Swiss authorities confirmed that scheduled negotiations toward a comprehensive peace settlement would not proceed as planned on Friday. Reports indicate that US Vice President JD Vance halted the Geneva discussions, casting uncertainty over the agreement’s long-term viability.
Market observers indicated that several months may be required before oil and natural gas shipments through the strait normalize to previous levels. Crude prices rebounded on Friday after experiencing sharp declines earlier in the week, reigniting some inflationary concerns.
Silver declined 2.5% to reach $64.09 per ounce. Platinum decreased 1.4% to $1,674. Copper futures also registered losses across both the London Metal Exchange and US markets.
The Bloomberg Dollar Spot Index advanced 0.9% throughout the week, intensifying downward pressure across commodity markets.
Gold’s immediate trajectory will predominantly hinge on whether the Federal Reserve implements its anticipated rate increase and the evolution of diplomatic efforts between Washington and Tehran.
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