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Gold Eyes Second Weekly Loss Despite Iran War Fears
Gold is trading around $5,051 and heading for a second consecutive weekly decline, even as the Iran conflict stokes inflation concerns that would typically fuel safe-haven demand.
What to know
- Gold sits at $5,051.60/oz and is on track for a second straight weekly loss, a rare occurrence at these elevated levels.
- The Iran conflict is feeding through into inflation expectations, with today’s US Core PCE data a critical test for the metal’s near-term direction.
- The gold-silver ratio has compressed to 62.5, suggesting silver is outperforming on a relative basis - a pattern often seen when industrial metals pricing diverges from pure safe-haven flows.
What happened
Gold is trading at $5,051.60/oz on Friday and appears set to close the week lower for the second time running. That back-to-back weekly decline is notable given the geopolitical backdrop - the ongoing Iran conflict has injected fresh uncertainty into energy markets and global supply chains, conditions that would ordinarily send investors into bullion.
Yet the metal has struggled to find sustained upside momentum. The pattern suggests the market is caught between two competing forces: geopolitical risk premium on one side, and the inflationary consequences of that same conflict on the other. Higher inflation typically means tighter monetary policy for longer, which raises the opportunity cost of holding non-yielding gold.
Silver is holding at $80.88/oz, while platinum sits at $2,039.60 and palladium at $1,580.50. The gold-silver ratio at 62.5 is well below its long-term average, indicating silver has been the stronger performer in recent months.
Who’s involved
Central banks remain the structural bid beneath the gold market. Their purchasing programmes have been a defining feature of the past three years, and nothing in the current environment suggests that appetite is fading. But the marginal buyer - the speculative and ETF-driven flow - is more hesitant.
The Federal Reserve is the other key player. Today’s US Core PCE Price Index release, alongside GDP growth data, will shape expectations for the rate path. If Iran-driven energy costs are bleeding into core inflation measures, the Fed’s hand is forced towards maintaining restrictive policy. That scenario is bearish for gold in the short term, even if it ultimately validates the long-term case for holding hard assets.
UK data is also in focus, with GDP and trade balance figures landing today. Sterling-denominated gold investors face a dual lens - domestic growth weakness could support the metal in GBP terms even if dollar-priced gold remains under pressure.
Why it matters
The two-week losing streak at the $5,000 level tells us something about market psychology. Gold has rallied enormously over the past year - trading above $5,000 would have seemed extraordinary just eighteen months ago. At these heights, the bar for further upside is higher. Buyers need fresh catalysts, not just the continuation of existing ones.
The Iran conflict is a case in point. The situation would need to escalate beyond current expectations - a broader regional conflict, direct disruption to oil flows through the Strait of Hormuz, or a sharp deterioration in diplomatic channels.
Historically, geopolitical shocks and inflation have both been independently bullish for gold. But when one causes the other - and the policy response is rate hikes - they can partially cancel out. In 2022, Russia’s invasion of Ukraine initially spiked gold before aggressive Fed tightening pulled it back down.
What to watch
Today’s Core PCE reading is the immediate catalyst. Any upside surprise will likely extend gold’s weekly decline, while a soft print could trigger a relief rally back towards recent highs.
Beyond the data, three things matter. First, crude oil prices - if Iran-related supply fears push energy costs materially higher, the inflation narrative intensifies and complicates gold’s path. Second, real yields on US 10-year TIPS - these remain the single best predictor of gold’s medium-term direction. Third, ETF flow data over the coming week. Two consecutive weekly losses at the $5,000 level could trigger profit-taking from momentum-driven holders.
The structural bull case for gold remains intact, but the next leg higher likely requires either a genuine escalation in the Iran conflict or a clear signal that the Fed is pivoting towards cuts.
This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.
