Gold fell below $4,200 an ounce on Friday, erasing gains from earlier in the week as hawkish signals from the US Federal Reserve overshadowed the positive impact of the US-Iran peace agreement. The deal had pushed oil prices lower and eased inflation concerns, initially supporting bullion. On Wednesday, the Fed kept interest rates unchanged as expected, but signaled growing support for rate hikes later this year. Higher borrowing costs typically diminish the appeal of non-yielding assets such as gold by raising their opportunity cost.
At the same time, investors welcomed signs of improving shipping conditions through the Strait of Hormuz after the US-Iran interim peace accord took effect, bringing an end to a prolonged conflict that had caused the largest supply disruption on record. Nonetheless, traders stayed cautious, noting that it could take months for shipping activity and energy flows to fully recover to levels seen before the conflict erupted in late February.
