Gold edged higher on Friday as investors balanced reports of an extended US-Iran ceasefire against stubborn inflation and expectations that the Federal Reserve will keep borrowing costs elevated into next year.
Spot gold rose 0.2% to $4,499.56 an ounce by 0231 GMT, while US gold futures slipped 0.1% to $4,529.80, leaving the market caught between falling war-risk premiums and a still-restrictive monetary backdrop as liquidity thins before the weekend.
Bullion remained about 0.2% lower for the week, underscoring how quickly haven demand has shifted as traders reassess geopolitical risk and the path for US interest rates.
The metal had dropped to a two-month low of $4,360 in late trading on Thursday before reversing after reports that Washington and Tehran had agreed to extend their ceasefire and ease restrictions on shipping through the Strait of Hormuz.
The deal has yet to be formally approved by President Donald Trump, while Iranian state media said no agreement had been finalised.
That uncertainty helped keep some haven demand intact, even as the prospect of calmer shipping conditions reduced the immediate risk premium attached to bullion.
“Markets are now waiting for the deal to be signed, even if it is only pending Trump’s signature,” GoldSilver Central Managing Director Brian Lan said, according to King World News.
He said gold had appeared vulnerable to further losses before the ceasefire headlines triggered a rebound.
Gold’s gains were limited by the prospect of US rates staying higher for longer.
Inflation rose in April at the fastest pace in three years, driven partly by higher energy costs linked to the Iran conflict, reinforcing expectations that the Fed will avoid cutting rates in the near term.
New York Fed President John Williams said monetary policy was “in the right place” given the outlook, adding that inflation was likely to remain elevated in the near term before easing later in the year.
Higher interest rates tend to weigh on gold because the metal does not pay interest, making cash and bonds comparatively more attractive.
That makes the Fed’s policy path a key driver for bullion, particularly when geopolitical risks are easing rather than intensifying.
Silver edged 0.1% higher to $75.67 an ounce and remained on track for a weekly gain. Palladium rose 0.4% to $1,373.14, also heading for a weekly advance.
Platinum fell 0.4% to $1,915.53 and was set for a weekly loss, reflecting a more uneven tone across the precious metals complex.
Gold’s near-term direction is likely to hinge on two factors: whether the US-Iran ceasefire is formally signed and how long inflation pressures keep the Fed on hold.
A confirmed truce could reduce haven demand, especially if shipping through the Strait of Hormuz normalises.
But any setback in the talks, or further signs that inflation is becoming entrenched, could revive demand for bullion as a hedge against market and policy uncertainty.