Gold prices fell on Friday, with spot gold down 0.6% to $4,186.99 an ounce at 22:27 ET, positioning the metal for a weekly decline of more than 3%. The drop reflects persistent inflation concerns and growing expectations that the U.S. Federal Reserve will raise interest rates later in the year. U.S. gold futures for December delivery rose 2.2% to $4,206.80 after renewed optimism about a possible U.S.–Iran peace agreement, following President Donald Trump’s statement that Washington and Tehran could sign a deal as soon as the weekend, potentially reopening the Strait of Hormuz. Iranian officials, however, clarified that no final agreement had been reached, leaving regional uncertainty.
The broader market reacted positively to the diplomatic hopes: oil prices fell sharply after Trump’s comments, and global equity markets rallied. Among other precious metals, spot silver slipped 0.5% to $67.00 per ounce, while platinum rose 0.6% to $1,734.08 per ounce.
Fresh U.S. economic data showed producer prices in May rising more than expected, marking the largest annual increase in three‑and‑a‑half years as higher energy costs filtered through the economy. This data reinforced concerns that inflationary pressures remain elevated, prompting traders to increase bets that the Federal Reserve could resume policy tightening later in the year. Markets are now pricing roughly a 60% probability of a Fed rate hike by December.
Higher interest rates raise the opportunity cost of holding non‑yielding bullion, reducing gold’s attractiveness relative to interest‑bearing assets. Consequently, gold, traditionally viewed as a hedge against inflation and geopolitical uncertainty, has struggled as investors shift focus toward the prospect of tighter monetary policy.