Gold set for weekly loss as Treasury yields remain firm

Gold edged lower on Friday and remained on track for a weekly decline.

Firm Treasury yields could continue to weigh on the metal amid ongoing inflation concerns.

Lingering tensions in the Strait of Hormuz could continue to push oil prices up, reinforcing inflation concerns and weighing on bullion. The collapse of peace talks has also sustained upward pressure on energy markets, with investors increasingly pricing in a prolonged period of elevated inflation risks.

As such, next week’s monetary policy decisions could be a key catalyst. The Federal Reserve is expected to keep rates unchanged while assessing the inflationary impact of the conflict, with similar caution anticipated from other major central banks. The Bank of Japan is likely to remain on hold while signalling readiness to tighten, and the European Central Bank may continue its cautious stance to counter energy-driven inflation pressures.

Gold’s near-term trajectory will remain closely tied to the developments in energy markets and their influence on inflation expectations and global interest rates. However, persistent tensions in Eastern Europe and ongoing central bank purchases continue to provide a supportive longer-term backdrop.