ALBAWABA - Gold prices fell on Friday, putting the precious metal on course for a weekly loss as uncertainty surrounding U.S.-Iran negotiations and escalating tensions across the Middle East continued to influence global markets.
Spot gold fell 0.6% to $4,447.22 an ounce, dropping below the critical $4,450 level and on track for a weekly decrease of about 2%. The metal is still well below pre-war levels seen before the commencement of the U.S.-Iran confrontation earlier this year.
Sentiment in the market fell on concerns that diplomatic efforts to end the war had stagnated. U.S. President Donald Trump stated last week that the talks were close to a deal, but Iranian Foreign Minister Abbas Araghchi subsequently acknowledged there had been no substantial progress.
The week added to regional instability with fresh military confrontations including Hezbollah, strikes on Gulf states and reports of a U.S. raid on a tanker linked to Iran, raising fears of wider security hazards in the region.
Disruptions to shipping and energy flows through the Strait of Hormuz, now in its fourth month, have compounded rising oil prices and raised fears of global inflationary pressures.
And analysts worry that a protracted period of uncertainty in the energy markets could force central banks to keep interest rates higher for longer. Generally, this type of scenario diminishes demand for gold, which doesn't provide interest revenue.
Market experts say the uncertainty surrounding the future of the Strait of Hormuz continues to be one of the primary variables affecting commodity markets since any serious disruption might lead to additional increases in energy prices and complicate monetary policy decisions globally.
At the same time, U.S. Federal Reserve officials are still signaling caution. The ongoing economic uncertainty makes it hard to anticipate the direction of interest rates, policy makers say, and investors are watching both geopolitical developments and inflation trends attentively.
Other precious metals also declined, with silver, platinum and palladium all trading lower as investors reassessed risk in an uncertain geopolitical climate.
