Spot gold is on track for its largest weekly loss since early June, weighed down by a sharp repricing of US interest rate expectations.
The precious metal fell 2% in the previous session before edging up 0.2% to $3,982.52 an ounce in early Asian trade, but the broader weekly trend remains firmly negative.
The decline reflects a shift in market dynamics where inflation risks from energy markets are outweighing traditional safe-haven demand.
Renewed hostilities in the Middle East, specifically strikes affecting the Strait of Hormuz, have spiked crude oil prices.
This energy surge has revived fears that the Federal Reserve may need to raise interest rates to contain inflation, a scenario that typically pressures gold by increasing the opportunity cost of holding non-yielding assets.
The conflict in West Asia continues to threaten critical global shipping lanes, creating volatility across energy and commodities markets.