Gold Prices Fall After Yesterday's Gains as Market Awaits Fed Decisions
Gold prices fell sharply during Friday's trading session, heading toward a new weekly loss, as geopolitical concerns eased and focus shifted back to U.S. monetary policy expectations ahead of the Federal Reserve’s decisions next week.
Gold Falls as Geopolitical Tensions Ease
The price of gold fell by about 1.5% during Friday’s trading to reach $1,472 per ounce, following strong gains of over 5% during Thursday’s session.
This decline came after U.S. President Donald Trump announced the cancellation of planned military strikes against Iran and indicated the possibility of a peace agreement between the two countries in the near future.
Geopolitical developments remain the most influential factor on gold prices at present, as prices react directly to any developments related to tensions in the Middle East.
Trump stated on Thursday that the United States and Iran could reach a peace agreement by the end of the week, which could lead to the reopening of the Strait of Hormuz to global shipping.
Despite these statements, Iran has denied that a final agreement has been reached so far, keeping uncertainty alive in financial markets.
Inflation Fears and U.S. Interest Rates Weigh on the Precious Metal
In addition to geopolitical factors, investors continue to monitor the U.S. Federal Reserve’s stance on interest rates.
Current expectations point to a growing likelihood of an interest rate hike by year-end, which exerts downward pressure on gold, as higher rates increase the cost of holding the non-yielding yellow metal.
If the Fed sends more hawkish signals, gold could face further selling pressure, with the possibility of testing levels below $4,000 per ounce.
Gold Has Lost 20% of Its Value Since the Start of the War
Gold has lost nearly 20% of its value since the outbreak of the war with Iran, as fears of rising energy prices have contributed to increased global inflationary pressures.
These concerns have prompted many central banks to keep interest rates at elevated levels for longer, which has negatively impacted gold’s performance in recent months.
According to the FedWatch tool, traders currently expect a roughly 60% probability of a U.S. interest rate hike in December.
ANZ Bank has also lowered its year-end gold price forecast by $400 per ounce, setting a new target of $5,200, amid the sharp market volatility seen recently.
Technical Analysis of Gold
From a technical perspective, the overall trend for gold remains bearish in the medium term, though prices may see some corrective upward rebounds in the coming period.
Gold is expected to target $4,300 and then $4,400 per ounce, which represent key resistance levels near the downtrend line on the daily timeframe, before potentially resuming its downward trajectory.
