Gold heads for biggest weekly slump in over six weeks

Global gold prices are heading for their steepest weekly decline in more than six weeks, as rising geopolitical tensions in the Middle East, higher oil prices and growing expectations of further US interest rate hikes weigh heavily on the precious metals market.

According to a Reuters report, gold has fallen around 3.2 per cent so far this week, marking its biggest weekly drop since June 1. Although easing inflation data in June initially supported bullion prices, escalating tensions involving the United States and Iran have offset those gains and renewed market uncertainty.

On Friday, spot gold edged up 0.5 per cent to $3,988.20 per ounce after earlier falling to its lowest level since July 1. Meanwhile, US gold futures for August delivery were little changed at $3,992 per ounce.

KCM Trade Chief Market Analyst Tim Waterer said geopolitical risks in the Middle East continue to influence the market, but concerns over inflation and rising bond yields have become the dominant factors keeping gold under pressure.

Market analysts said higher oil prices could fuel inflation, increasing the likelihood of tighter monetary policy by central banks. In a higher interest rate environment, investors tend to shift toward yield-generating assets, reducing demand for non-interest-bearing assets such as gold.

Other precious metals also remained under pressure. Spot silver fell 0.5 per cent to $55.22 per ounce, platinum dropped 0.7 per cent to $1,605.62, and palladium slipped 0.4 per cent to $1,244.86, with all three metals on track to end the week lower.