Gold Falls for Second Straight Week Amid Ongoing US-Iran Diplomatic Uncertainty

Gold Prices Steady Amid US-Iran Standoff

Gold prices steadied on Friday as traders digested the latest developments in the nine-week conflict between the US and Iran, which has heightened inflation risks and dashed hopes for rate cuts from central banks across the world. Bullion fluctuated between gains and losses, ultimately closing little changed and marking a second consecutive weekly decline.

The conflict has had a significant impact on gold prices, with the metal losing around 14% since it began at the end of February. The closure of the Strait of Hormuz and resulting energy price shock have dimmed the prospect of interest rate cuts, a headwind for non-yielding bullion. The situation has also led to a stronger US dollar, which makes precious metals more expensive for most buyers.

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Despite the current uncertainty, most analysts are bullish on the precious metal. The latest data from the World Gold Council showed that central banks added gold holdings in the first quarter at the fastest pace in more than a year. This trend is expected to continue if there is a clear de-escalation in the Middle East and an accompanying dip in interest rate expectations and the dollar.

Spot gold closed 0.1% lower at $4,614.21 an ounce in New York, while silver advanced 2.2% to $75.36 an ounce, adding to Thursday's 3.4% gain. Platinum edged higher, while palladium dipped. The Bloomberg Dollar Spot Index rose 0.1% after losing 0.8% on Thursday.