Gold prices slipped on Friday and were headed for weekly losses as a flare-up in U.S.-Iran military action spurred concerns over higher inflation and interest rates. 

Silver and platinum prices were also set to drop this week, as oil prices rose and the dollar steadied from last week’s losses.

Spot gold fell 0.6% to $4,101.11 an ounce, while gold futures fell 0.8% to $4,108.90/oz by 04:46 ET (08:46 GMT). 

Spot gold was trading down about 1.8% this week. 

Gold heads for weekly loss on Iran, rate uncertainty

Gold was spooked by the U.S. launching a series of attacks against Iran this week, which sent oil prices soaring. 

U.S. President Donald Trump declared that a ceasefire with Iran was over, and ordered more attacks against the country, drawing retaliatory measures from Tehran.

While an Axios report said regional mediators were attempting to salvage a recent U.S.-Iran memorandum of understanding, peace in the Middle East appeared wholly uncertain.

The jump in oil prices fueled concerns over energy-driven inflation, which could in turn elicit a more hawkish stance from the Federal Reserve. Markets were seen steadily raising their bets on a Fed rate hike in 2026 this week, CME Fedwatch showed. 

Higher rates bode poorly for non-yielding assets like gold, given that they increase the opportunity cost of investing in the metal over debt. 

"Gold found some support on expectations of limited escalation in the Middle East conflict. This is despite earlier concerns that a rebound in energy prices could see the Fed keeping interest rates higher for longer to combat stubbornly high inflation," ANZ analysts wrote in a note.

Gold has largely underperfomed as a safe haven since the onset of the U.S.-Iran war, as concerns over sticky inflation and interest rates largely overshadowed its haven appeal. 

Other precious metals logged a mixed performance this week. 

Spot silver slid 0.7% to $59.5250/oz on Friday, but was down more than 4% this week.

Spot platinum edged lower by 0.1% to $1,616.14/oz, but fared better than its metal peers this week with a 0.3% drop.