Gold Holds Firm Above $4,000 Despite US-Iran Tensions

Despite escalating tensions in the Middle East between the US and Iran, gold prices have held firm above $4,000 per ounce. Spot gold edged 0.6% higher to $4,080 an ounce on Friday, marking a weekly gain of over 1%. This move comes despite the added pressure from the ongoing conflict, which has seen oil prices rise sharply.

Since the war began in late February, gold has fallen by nearly a quarter, pressured by expectations of higher interest rates to combat inflation caused by the Gulf supply shocks. However, gold has largely hovered around the $4,000 level for nearly a month, with many traders considering this as a key support.

Commerzbank AG noted that despite rising oil prices and concerns about interest rates, the price has held above $4,000 per ounce. Analysts at ING attributed any rebound in gold to dip buying and short covering, but warned that a large move up will require a drastic outlook on US monetary policy.

Market participants are eagerly awaiting the Federal Reserve's policy meeting next week, where it is likely to keep rates unchanged. However, most are anticipating an interest rate hike at the September meeting, which could cap any potential recovery in gold prices.