Gold Falls 3% Weekly on US Fed Rate Hike Expectations

Precious metals touched a three-month high, saw a midweek rebound after a sharp selloff, and pulled back again on Friday as markets reacted to a mix of geopolitical tensions, shifting Federal Reserve expectations, and stronger-than-expected US labour data. A market participant said a blockbuster August jobs report on Friday reversed much of the dovish shift from the US Federal Reserve in a single session.

The geopolitical backdrop driving oil, and in turn gold: The crude-oil rally referenced here is tied to an active military conflict that has been unfolding since February 28, 2026, when US and Israeli strikes on Iranian targets triggered what is now widely referred to as the 2026 Iran war and the associated Strait of Hormuz crisis. Iran responded by threatening and periodically disrupting shipping through the Strait — a chokepoint that carries a substantial share of the world's seaborne oil — leading to a US naval blockade and repeated exchanges of strikes between the two sides in the months since. The latest escalation saw the US strike Iranian rocket launchers near the Strait, followed by Iranian retaliatory strikes on Kuwait and other Gulf states, which is what pushed crude prices higher this week and fed into the inflation concerns cited in gold's price action.

Bullion initially found support from this geopolitical uncertainty and weakness in the US dollar. However, the escalation adversely affected gold as heightened inflation concerns from the crude rally pushed expectations of a September Federal Reserve rate hike sharply higher. Rising Treasury yields and a stronger dollar then outweighed safe-haven demand, triggering a sharp correction in precious metals.

Market mood shifted again mid-week after weaker-than-expected US labour-market data and dovish Fed commentary revived hopes of a less aggressive monetary policy stance. That rebound proved short-lived once Friday's August US employment report came in, pushing Treasury yields and the dollar sharply higher again and reversing much of the earlier dovish sentiment, analysts said.

Immediate resistance for Comex Gold is placed at the $4,500–$4,530 zone, with support at $4,330–$4,360. For MCX gold, resistance lies at Rs 1,56,500–Rs 1,57,000, with support at Rs 1,51,500–Rs 1,52,000, analysts added.

Also Read: Gold posts 1.31 pc weekly surge as US-Iran conflict escalates