Gold Gains on Bargain Hunting Despite Fourth Consecutive Weekly Loss Looming on Rate Hike Expectations

Gold bullion recorded a modest recovery on Friday, with spot gold climbing 0.9% to $4,416.90 per ounce by 9:34 a.m. ET. This bounce, however, does little to alter the broader weekly trend, as the metal is still poised for a 1.6% loss following its dip to a four-month low of $4,097.99 earlier in the week. Similarly, U.S. gold futures for April delivery rose 0.8% to $4,411.10.

Market analysts attribute the brief rally to profit-taking following recent declines. Fawad Razaqzada, an analyst at City Index and FOREX.com, noted that the downward momentum had attracted some bargain hunters, providing temporary support. He cautioned, however, that the outlook remains fragile. The renewed strength in crude oil prices and a stabilizing U.S. dollar against major currencies could pressure gold lower again.

Oil prices have remained elevated, holding above $110 per barrel. This follows the extension of a deadline by U.S. President Donald Trump for Iran to reopen the Strait of Hormuz, after Tehran rejected a U.S. proposal to end hostilities. The war, now in its fourth week, has intensified across the Middle East. Its economic fallout includes soaring costs for energy and fertilizers, which are stoking global inflation fears.

These inflation concerns are reshaping the monetary policy outlook. The Federal Reserve's perceived shift toward potential rate hikes increases the opportunity cost of holding non-yielding assets like gold. According to CME Group's FedWatch Tool, traders have completely priced out any rate cuts for 2026. This marks a significant recalibration from pre-war expectations, which had priced in two cuts.

Not all institutional views are uniformly bearish. Commerzbank recently upgraded its gold price forecasts, raising its year-end target to $5,000 per ounce from $4,900. The bank's rationale is that the current pullback is unsustainable. Its base case assumes the Iran conflict will conclude in the spring, which should ease inflation pressures and allow the Federal Reserve to pivot back to rate cuts. Commerzbank projects approximately 75 basis points of easing by mid-next year.

In other precious metals markets, spot silver dipped 0.4% to $67.74 per ounce. Platinum gained 0.5% to $1,835.60, while palladium rose 0.9% to $1,370.18.