Gold (XAU/USD) edged higher on Friday, recovering from earlier losses as the US Dollar (USD) eased modestly, with geopolitical developments—particularly US-Iran tensions—driving price action. At the time of writing, gold was trading around $4,730 after hitting an intraday low of $4,657, marking a decline of nearly 2.0% for the week [1]. The US Dollar Index (DXY) softened to 98.50 after reaching a one-week high of 98.94 on Thursday, providing some support to gold prices [1].
Geopolitical headlines contributed to market volatility, with reports that Iran’s Foreign Minister Abbas Araghchi was expected in Islamabad for talks with Pakistani officials, which slightly improved hopes for future negotiations and offered some support to gold [1]. However, the upside for gold remained capped due to persistent macroeconomic headwinds, including escalating tensions in the Strait of Hormuz, which pushed West Texas Intermediate (WTI) crude oil prices up over 10% this week to near $93 per barrel, fueling inflation fears [1].
The ongoing US-Iran standoff and the dual blockade of the Strait of Hormuz continued to weigh on market sentiment. While a ceasefire extension announced by US President Donald Trump eased immediate escalation fears, Tehran accused the US naval blockade of violating the ceasefire and signaled unwillingness to participate in peace talks under current conditions. President Trump stated, “We’ll see what happens, we have no pressure,” and warned that if no agreement is reached, military action could resume, with US ships “locked and loaded, and ready to go” [1].
On the economic data front, the University of Michigan’s Consumer Sentiment Index for April rose to 49.8, above the forecast of 47.6 and matching the previous reading. The Consumer Expectations Index improved to 48.1 from 46.1, while 1-year inflation expectations eased slightly to 4.7% from 4.8%, and the 5-year outlook edged higher to 3.5% from 3.4% [1]. These data points, combined with elevated oil prices, reinforced expectations that central banks, particularly the Federal Reserve, will maintain higher interest rates for longer, limiting any meaningful recovery in gold [1].
CONCLUSION
Gold remains under pressure, heading for a weekly loss as higher-for-longer rate expectations and geopolitical tensions in the Strait of Hormuz drive market sentiment. Elevated oil prices and firm US economic data are expected to keep the US Dollar and yields supported, capping gold’s upside in the near term.