Gold edged up on Friday on safe-haven demand amid escalating tensions in the Middle East, but was headed for a weekly loss, as mounting inflation worries dimmed prospects for interest rate cuts, reports Reuters.
Spot gold was up 0.3 per cent at $5,093.76 per ounce, as of 0942 GMT. The metal is down over 3 per cent so far this week, snapping a four-week winning streak, as fading interest rate-cut prospects and a volatile dollar weighed on bullion.
US gold futures for April delivery were up 0.5 per cent at $5,102.10.
"Geopolitical risk remains a key factor supporting prices as hopes of a swift resolution in Iran do not appear forthcoming right now. However, upside potential is being capped by inflationary fears due to rising oil prices, (which have) strengthened the 'higher-for-longer' narrative regarding US interest rates," said Zain Vawda, analyst at MarketPulse by OANDA.
While gold is considered a long-term hedge against inflation, it tends to do well when interest rates are low, as it is a non-yielding asset. It has risen over 18 per cent so far this year.
Israel carried out heavy air strikes on Hezbollah-controlled southern suburbs of Beirut and started a "broad-scale" wave of attacks against infrastructure ?in Tehran on Friday, while Iran said it targeted the heart of Tel Aviv with missiles.
Crude prices headed for the sharpest weekly gain since Russia launched its full-scale invasion of Ukraine in February 2022.
The dollar slid around 0.1 per cent, making greenback-priced bullion more affordable for holders of other currencies, but was headed for its steepest weekly ?gain in more than a year.
Meanwhile, US Federal Reserve policymakers will meet on March 18, where they are widely expected to hold interest rates steady, according to CME Group's FedWatch tool.
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