Gold prices fell on Friday and were on track for a weekly loss as growing expectations of higher US interest rates outweighed support from escalating tensions in the Middle East.
Spot gold slipped 0.3% to US$4,461.28 an ounce, extending its weekly decline to about 1.6%, while US gold futures for August delivery fell 0.4% to US$4,487.90.
Market sentiment remained cautious after Iran-backed Hezbollah rejected a new ceasefire proposal involving Lebanon and Israel, clouding prospects for broader regional peace efforts and negotiations between the US and Iran.
Despite heightened geopolitical uncertainty, investors focused on the prospect of tighter US monetary policy. Kansas City Federal Reserve President Jeffrey Schmid said policymakers could either remain patient or raise rates further to tackle persistent inflation, while San Francisco Fed President Mary Daly said future policy decisions would depend on economic developments.
According to CME Group’s FedWatch tool, markets are pricing in a 51% probability of a US interest rate hike before the end of the year.
RHB Investment Bank Bhd (RHB Research) maintained a bearish outlook on gold, saying the technical setup remains weak despite a modest rebound in COMEX gold prices on Thursday. The research house noted that COMEX gold rose US$38.10 to close at US$4,505 but remained below both its 20-day and 50-day simple moving average lines, signalling that the broader downtrend remains intact.
RHB Research said a break below the US$4,400 support level could trigger a deeper correction towards US$4,250. It advised traders to maintain short positions initiated at US$4,605.70, with a stop-loss set at US$4,850.
Investors are now awaiting the release of May’s US nonfarm payrolls data later on Friday for further clues on the Federal Reserve’s interest rate trajectory.
Other precious metals also declined, with silver falling 1.8% to US$72.53 per ounce, platinum losing 0.8% to US$1,885.83 and palladium dropping 0.8% to US$1,309.91. All three metals were also headed for weekly losses.
