Gold prices were headed for a second consecutive weekly decline as investors assessed the likelihood of higher U.S. interest rates and awaited the upcoming Federal Reserve policy meeting. Concerns that inflation may remain elevated have continued to weigh on the precious metal, which typically performs better in a low-interest-rate environment.
Spot gold rose 0.3% to $4,227.17 per ounce on Friday, while U.S. gold futures settled 3% higher at $4,238.80. Despite the day’s gains, gold remained down 2.3% for the week, reflecting ongoing pressure from expectations that the Federal Reserve may keep rates elevated for longer.
Market sentiment has been influenced by inflation concerns, particularly those linked to energy prices. Although oil prices fell more than 3% amid reports of a possible agreement between the United States and Iran to halt hostilities in the Gulf region, uncertainty surrounding the negotiations limited optimism. Analysts noted that investors remain cautious, recalling previous instances when inflation proved more persistent than expected.
Recent U.S. economic data has reinforced expectations of tighter monetary policy. Producer prices rose more than anticipated in May, while consumer inflation climbed above 4%, strengthening the case for maintaining higher borrowing costs. According to the CME FedWatch Tool, traders currently see a 57% probability of a U.S. rate hike by December.
Attention is now focused on the Federal Reserve’s June 16–17 policy meeting, the first to be chaired by Kevin Warsh. Markets widely expect the central bank to keep interest rates unchanged, though investors will closely monitor guidance on future policy moves.
Meanwhile, UBS has revised its gold outlook lower, warning that delayed rate cuts could push prices toward the $3,850–4,000 per ounce range in the near term.
Among other precious metals, silver and palladium recorded weekly gains, while platinum was on track for a weekly decline. Rising gold prices have also prompted luxury watchmaker Rolex to increase global prices for its gold watches by an average of 5%.
