Gold Set for Weekly Loss as Hawkish Fed Outweighs Peace Deal

Gold prices are poised for a third consecutive weekly decline, with a hawkish stance from the U.S. Federal Reserve and increased expectations of interest rate hikes overshadowing the recent signing of an interim peace deal between the United States and Iran. This geopolitical development, typically a supportive factor for gold as a safe-haven asset, has failed to significantly boost prices amid persistent inflation concerns and the Fed's commitment to monetary tightening. Analysts point to the Fed's recent statements indicating a prolonged period of higher interest rates as a primary driver for gold's underperformance. The prospect of higher rates increases the opportunity cost of holding non-yielding assets like gold, making them less attractive to investors compared to interest-bearing instruments. The market is now closely watching upcoming economic data releases, including inflation figures and employment reports, for further clues on the Fed's future policy path and its potential impact on gold prices. The current trajectory suggests that gold may struggle to find upward momentum unless there is a significant shift in central bank policy or a substantial escalation in geopolitical tensions that drives a stronger flight to safety.