A sharp sell-off in gold struck the Asian market on Friday, with the spot price briefly tumbling by approximately $40. The move was triggered by uncertainty surrounding the progress of U.S.-Iran negotiations.
Earlier, Hezbollah had rejected a new ceasefire plan for Lebanon, and Israel stated it would not withdraw its troops, undermining U.S. President Trump's efforts to halt the conflict and advance a peace deal with Tehran. Bloomberg reported that this cast a shadow over the push to end regional hostilities.
On Friday, the gold price fell below $4,450 per ounce, bringing its weekly loss to around 2%. This week witnessed the most severe clashes in the Middle East since a ceasefire agreement was reached in early April. The price touched a low of $4,435.03 per ounce during the session.
President Trump stated that peace talks had entered their "final stages," while Iranian Foreign Ministry spokesman Abbas Araghchi had previously indicated that "no substantive progress" had been made.
The protracted nature of the Iran conflict, causing prolonged disruptions to energy shipments through the Strait of Hormuz, has driven up oil prices and heightened market concerns about global inflation.
This situation makes it more likely that central banks will keep interest rates steady or even raise them further. This environment is unfavorable for precious metals, which offer no yield.
Since the Iran conflict escalated in late February, the gold price has fallen by approximately 15%.
Independent precious metals trader Tai Wong commented, "Unless we see a clear and lasting ceasefire with Iran and the reopening of the Strait of Hormuz—which would lead to falling energy prices and ease market fears about potential rate hikes—the likelihood of gold hitting new highs this year appears increasingly remote."
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