Gold prices fell for a third consecutive week, losing more than 2%, as investors weighed easing geopolitical risks and hawkish signals from the Federal Reserve. ING strategists Warren Patterson and Ewa Manthey noted that the metal dropped for a third straight session on Friday, driven by reassessments of US-Iran negotiations and US monetary policy.
Geopolitical relief offsets Middle East risks
While tensions in the Middle East remain elevated, the resumption of oil and LNG flows through the Strait of Hormuz has calmed fears of energy supply disruptions and reduced the risk of a broader inflation shock. This easing of supply concerns has diminished gold's safe-haven appeal, even as ongoing regional instability continues to provide some underlying support.
Rate headwinds dominate
Hawkish comments from Federal Reserve Chair Kevin Warsh reinforced expectations that US interest rates will stay higher for longer, further pressuring gold. ING strategists expect the metal to remain sensitive to developments in the Middle East and shifts in Fed rate expectations, as the interplay between geopolitical risks and monetary policy keeps the outlook uncertain.