Gold prices remained on course to register their first monthly gain in five months on Friday as investors balanced concerns over the ongoing US-Iran conflict with the latest signals from the US Federal Reserve regarding inflation and future interest rate decisions.
The precious metal has regained momentum after weeks of weakness, supported by geopolitical uncertainty and shifting expectations surrounding US monetary policy.
Gold Heads For Strong Monthly And Weekly Gains
Spot gold edged 0.2% lower to $4,096.29 per ounce during early trading but was still on track to post a 1.1% weekly gain. Meanwhile, US gold futures for August delivery rose 0.1% to $4,094.10 per ounce.
For the month, gold is expected to finish more than 2.2% higher, marking its strongest monthly performance since February and ending a four-month losing streak.
Federal Reserve Decision Boosts Gold Sentiment
Gold prices received strong support earlier this week after the US Federal Reserve decided to keep interest rates unchanged at its latest policy meeting.
Although the central bank left borrowing costs steady, Fed Chair Kevin Warsh refrained from providing a clear timeline for future policy moves, leaving markets to reassess expectations for upcoming rate decisions.
Following the meeting, traders reduced expectations of a September rate hike. According to the CME FedWatch Tool, the probability of a rate increase in September has fallen to 63%, compared with nearly 80% before the Fed’s announcement.
Lower expectations for higher interest rates generally benefit gold, as the precious metal becomes more attractive when yields on interest-bearing assets are expected to remain stable.
US Dollar Recovers After Sharp Decline
The US dollar recovered around 0.3% after suffering its biggest single-day fall since January 2023, when it plunged approximately 2.4% in the previous trading session.
A weaker dollar typically supports gold by making it less expensive for buyers using other currencies, although Friday’s modest recovery slightly limited bullion’s gains.
Middle East Conflict Keeps Safe-Haven Demand Alive
Geopolitical tensions continued to underpin demand for gold after reports of a drone strike targeting gas vessels at Egypt’s Mediterranean port of Damietta.
The incident has intensified concerns that the ongoing US-Iran conflict could spread further and potentially threaten shipping through the Suez Canal, one of the world’s most important trade and energy transport routes.
Rising geopolitical risks often encourage investors to shift funds into safe-haven assets such as gold.
US Inflation Slows, But Oil Prices Remain A Concern
Fresh economic data showed that US inflation eased in June, with the Personal Consumption Expenditures (PCE) Price Index declining 0.1% month-on-month, marking its weakest reading since April 2020.
However, analysts caution that the improvement may prove temporary as escalating tensions in the Middle East continue to push oil prices higher, potentially reigniting inflationary pressures in the coming months.
Central Banks Continue Supporting Gold Demand
The World Gold Council (WGC) reported that global gold demand remained broadly stable during the second quarter of 2026, totaling 1,268.9 metric tonnes.
According to the report, increased buying by central banks helped offset weaker investment demand, highlighting continued institutional confidence in gold as a long-term reserve asset.
Other Precious Metals Performance
Among other precious metals:
- Spot silver remained largely unchanged at $58.98 per ounce.
- Platinum declined 1.3% to $1,638.97 per ounce.
- Palladium slipped 0.2% to $1,301.94 per ounce.
Key Economic Data To Watch
Investors are now awaiting several important economic releases that could influence global financial markets and precious metal prices, including:
- UK Nationwide House Price Index (July)
- Eurozone Flash Inflation (HICP) Data
- US University of Michigan Consumer Sentiment Index
These reports, along with developments in the Middle East and future Federal Reserve commentary, are expected to play a key role in determining the next direction for gold prices.