Gold prices are on track to close the week in negative territory, marking a retreat from recent highs as market participants recalibrate their risk models.
The precious metal faced persistent selling pressure on Friday, unable to find sustained support despite fresh military escalation between the United States and Iran in the Middle East.
Investors appear to be weighing the inflationary consequences of the conflict more heavily than the traditional safe-haven appeal of bullion.
The primary driver of the decline is a sharp repricing of US monetary policy expectations.
Renewed bets on higher interest rates have eroded the opportunity cost advantage of holding non-yielding assets like gold.
As the Federal Reserve’s policy path shifts toward a more hawkish stance to counteract potential supply-side inflation shocks from the Gulf, the dollar’s strength and rising yields have acted as a headwind for the commodity.