Gold headed for its first weekly drop in three as easing geopolitical tension in the Middle East sapped haven demand and a Federal Reserve inflation warning raised the prospect of fewer rate cuts.
Bullion was steady near $3,370 an ounce on Friday, and is down almost 2% for the week. President Donald Trump will decide whether to join Israel's attacks on Iran within two weeks, his spokeswoman said, reducing fears of a region-wide war that would threaten energy flows and spur inflation.
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The easing of tensions came after Fed Chairman Jerome Powell earlier in the week flagged inflation risks due to the impacts of Trump's tariff agenda. That could make it tougher for the central bank to lower borrowing costs, which would be a negative for gold, which doesn't pay interest and performs better in a lower-rate environment.
The precious metal is still up around 30% this year, and not far off its record high of $3,500 an ounce set in April. However, there have been some signs this week that investors are favoring silver and platinum as haven plays given bullion's elevated levels.
Major Wall Street banks have diverged over whether bullion can continue its record-setting rally. Goldman Sachs Group Inc. has reaffirmed its $4,000-an-ounce forecast by next year, while Citigroup Inc. sees prices dipping below $3,000 in 2026.
Spot gold dipped 0.1% to $3,366.20 an ounce as of 8:54 a.m. in Singapore. The Bloomberg Dollar Spot Index declined 0.1%, but is up 0.4% for the week. Silverwas steady, while platinum and palladium rose.
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