By: Economy Middle east

Gold prices rose over $5,000 on Friday following two consecutive sessions of gains as investors weighed escalating tensions between the United States and Iran and looked ahead to crucial U.S. inflation figures.

As of 5:10 GMT, spot gold was up 0.51 percent to $5,003.88, while U.S. gold futures for April delivery were up 0.49 percent at $5,022.

In the UAE, gold rates posted modest gains, with 24-carat gold gaining AED0.75 to AED602.5 and 22-carat gold rising AED0.75 to AED558. Additionally, 21-carat gold gained AED0.75 to AED535 and 18-carat gold edged up AED0.5 to AED458.5.

Meanwhile, 14-carat gold increased AED0.5 to AED357.75.

U.S.-Iran tensions mount

Despite the recent rise, gold prices are on course to decline nearly 1 percent for the week, even after a sharp mid-week rally driven by safe-haven demand. The metal’s weekly trajectory reflected an early selloff as optimism surrounding potential U.S.-Iran diplomatic engagement dampened risk aversion, before renewed geopolitical tensions later in the week revived support.

Trading activity also remained subdued, with some Asian markets closed for the Lunar New Year holiday.

Mounting diplomatic friction between Washington and Tehran continued to underpin gold prices. U.S. President Donald Trump cautioned that Iran must reach a nuclear agreement within roughly 10 to 15 days or face repercussions, heightening concerns over possible military escalation that could disrupt Middle East oil supplies and unsettle global markets.

Dollar set for strongest weekly gain since October

Still, gains were capped by a stronger U.S. dollar and hawkish undertones in the Federal Reserve’s meeting minutes, which scaled back expectations for near-term interest rate cuts.

The dollar was on track for its strongest weekly gain since October, supported by a series of better-than-expected economic readings, a more hawkish tone from the Federal Reserve and persistent tensions between the United States and Iran.

Attention has now turned to December’s Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation measure, for further signals on the trajectory of U.S. monetary policy.

Markets are currently pricing in the Federal Reserve’s first rate cut of the year in June, according to CME’s FedWatch Tool. Non-yielding bullion typically performs well in a low-interest-rate environment, as declining yields reduce the opportunity cost of holding gold.

Gold prices to reach $5,400 by end-2026

In a recent note, Goldman Sachs said that under its base-case scenario, central bank purchases are expected to reaccelerate, while private investors are likely to increase exposure primarily in response to Fed rate cuts, a dynamic the bank believes could lift gold prices to $5,400 per troy ounce by the end of 2026.

The bank added that it maintains a constructive medium-term outlook for gold prices, albeit with the potential for heightened volatility along the way.

Other precious metals

Elsewhere in precious metals markets, spot silver slipped 0.07 percent to $78.30 per ounce. Spot platinum rose 0.13 percent to $2,073.12 per ounce, while palladium gained 0.02 percent to $1,685.19 per ounce.