On Friday, precious metals and major currencies experienced notable volatility as geopolitical tensions between the United States and Iran intensified, driving safe-haven flows into the US Dollar and impacting commodity prices. Gold (XAU/USD) showed moderate gains but remained close to its year-to-date lows, trading around $3,940 and set for a 3% weekly decline. Upside attempts were capped below the $4,000 psychological level, with technical analysis indicating bearish momentum and the year-to-date low of $3,941 under pressure. Further downside targets include the October 2025 low at $3,886 and the 127.2% Fibonacci extension at $3,830 [3]. Silver (XAG/USD) also fell, trading at $55.44 per troy ounce, down 0.17% from Thursday and marking a 22.01% decrease since the beginning of the year. The Gold/Silver ratio rose to 72.08 from 71.60, reflecting relative weakness in Silver compared to Gold [4].
The escalation of the conflict, including US strikes against Iranian infrastructure and threats from Iran's Islamic Revolutionary Guard Corps to expand attacks to regional energy routes, has kept energy markets on edge. Reports of a possible closure of the Strait of Hormuz and the Red Sea Oil route by the Houthis have revived inflation fears and contributed to the strong performance of the US Dollar. The US Dollar attracted renewed demand amid deteriorating market sentiment, resilient US economic data, and hawkish statements from Federal Reserve officials, suggesting another interest rate hike could be warranted if inflation does not improve [2].
Currency markets reflected these developments, with the British Pound (GBP) extending its decline against the US Dollar for the second straight day, trading 0.4% lower near 1.3427. The GBP/USD pair faced selling pressure as the UK undergoes a leadership change, with Andy Burnham becoming Labour leader but not Prime Minister until Monday. Despite recent weakness, the Pound is set to end the week on a positive note, supported earlier by reports that incoming PM Burnham may appoint Shabana Mahmood as Finance Minister, viewed as a fiscal conservative by markets. Investors are awaiting UK employment and CPI data releases next week [1]. The Australian Dollar (AUD) also declined, trading around 0.6970, down 0.36% on the day, but remains on track for a third consecutive weekly gain. The AUD's outlook is supported by the Reserve Bank of Australia's hawkish stance and resilient economic data from China [2].
Technical analysis for GBP/USD shows the pair trading sharply lower at around 1.3430 but maintaining a modest bullish bias as it remains above the 20-day EMA at 1.3380. The pair declined after facing selling pressure near the downward-sloping border of the Descending Triangle formation above 1.3500 [1]. Gold's technical indicators remain bearish, with the RSI below 40 and MACD just below zero, suggesting rallies will find sellers. A clear break above $4,000 is needed to ease bearish pressure and shift focus towards higher resistance levels [3].
CONCLUSION
Escalating US-Iran tensions and strong US economic data have driven safe-haven flows into the US Dollar, resulting in sharp declines for Gold, Silver, and major currencies like GBP and AUD. Precious metals remain under bearish pressure, with technical indicators suggesting further downside risk. Market participants are closely watching geopolitical developments and upcoming economic data releases for further direction.