Key Takeaways:
Gold futures posted their largest weekly decline in over two years, caught between renewed hopes for a more dovish Federal Reserve and persistent inflation fears driven by geopolitical tensions. Front-month gold on the Comex division closed the week 2.8% lower at $4,722.30 a troy ounce.
The drop came despite a late-week rally after the Department of Justice ended its probe into Fed Chair Jerome Powell. "This development is positive for gold and silver, as it strengthens the path for [Kevin] Warsh to become the next Fed chair," Peter Cardillo of Spartan Capital Securities, said. A leadership change could signal a quicker pivot to lower interest rates, which benefits non-yielding assets like precious metals.
The weekly decline was the largest for the yellow metal since the week ending March 20, 2026, erasing a three-week winning streak. Silver followed a similar path, with front-month futures falling 6.6% to $76.383 an ounce, the biggest weekly drop since the same period in March 2026 and snapping four straight weeks of gains.
The market remains torn between the prospect of a more accommodative Fed and ongoing inflationary pressures. Stalled talks in the Iran conflict have kept energy prices elevated, with analysts at ING noting that central banks may "have to react to this inflationary shock" by holding rates higher for longer.
Concerns over prolonged higher interest rates have created significant headwinds for gold. Higher rates increase the opportunity cost of holding the non-interest-bearing precious metal. "The absence of a definitive peace treaty [between the U.S. and Iran] or a clear diplomatic road map has left the Strait of Hormuz and Gulf energy assets in strategic paralysis, forcing gold to give up its gains," Samer Hasn, a senior market analyst at XS.com, said in an email.
Technical indicators also suggest bearish momentum is building. RHB Retail Research’s Joseph Chai noted that Comex gold futures' latest price action, combined with the relative strength index falling, points to a potential pullback toward the $4,600 per ounce level. The 50-day simple moving average, currently around $4,870 an ounce, continues to trend downward and serve as overhead resistance, according to the analyst.
This article is for informational purposes only and does not constitute investment advice.
