FX.co ★ Gold Heads for Sharp Weekly Drop

Gold held below $4,700 per ounce on Friday after a sharp two-day selloff and was headed for its worst weekly loss in six years. The decline came as surging energy prices, driven by the conflict in the Middle East, heightened inflation worries and reduced expectations for interest rate cuts. Rising energy costs and stronger inflation pressures pushed investors toward the dollar and US Treasuries, eroding demand for traditional safe-haven metals such as gold.

The energy shock also forced markets to reassess the monetary policy outlook after a series of hawkish signals from major central banks. The Federal Reserve left interest rates unchanged and signaled that cuts are unlikely until there is clear evidence of easing inflation. Similarly, the European Central Bank, the Bank of Japan, and the Bank of England all kept rates on hold but adopted a more hawkish tone, signaling a bias toward tighter policy. As a result, markets have postponed expectations for Fed rate cuts to 2027 and are now pricing in two rate hikes each from the ECB and BOE this year, further undermining gold’s appeal.