Gold prices slip but remain on track for third weekly gain as U.S. rate-cut expectations rise

Gold prices edged lower on Friday but remained on track for a third consecutive weekly gain, as markets reassessed the chances of U.S. interest rate cuts if the fragile U.S.-Iran ceasefire holds. Spot gold fell 0.4% to $4,745.43 per ounce by 0906 GMT, but has gained 1.5% so far this week. U.S. gold futures for June delivery dropped 1.1% to $4,767.30. The dollar was set for a 1.4% weekly decline, making bullion priced in the currency cheaper for holders of other currencies.

The announcement of a ceasefire led the market to sell oil and lower inflation expectations, while rate-cut pricing has supported gold throughout the week, said UBS analyst Giovanni Staunovo. Oil prices climbed on Friday, driven by concerns over potential supply disruptions from Saudi Arabia, though they still faced a more than 10% weekly drop, the steepest in a week since June 2025.

Spot gold has fallen about 10% since the conflict with Iran began on February 28, as elevated energy prices fueled inflation expectations, raising the prospect of higher U.S. interest rates, which are a disincentive to hold non-yielding gold. Investors now anticipate a 24% chance of at least one rate cut by December, according to CME's FedWatch Tool, up from 12% the previous week.

"The market will continue to be influenced by the conflict in the Middle East. But for the longer term, I still hold a positive outlook driven by all the structural factors remaining in place," Staunovo added. There was no sign Iran was lifting its near-total blockade of the Strait of Hormuz, as Tehran cited Israel's ongoing attacks on Lebanon, including the heaviest strikes of the war on Wednesday, as a sticking point.

Markets are also focused on March's U.S. Consumer Price Index data, due later in the day, for further clues on the Federal Reserve's monetary policy direction. Gold demand in India picked up slightly, while premiums in China narrowed as retail demand slowed.

Among other precious metals, spot silver was steady at $75.08 per ounce, platinum lost 3.1% to $2,038.45, and palladium fell 1.5% to $1,534.83.