Gold Prices Sink as Iran Oil Standoff Sparks Fed Rate Fears

TLDR

• Gold traded near $4,271 an ounce, down more than 2% for the week.
• Oil prices stayed elevated as the US and Iran remained deadlocked over the Strait of Hormuz.
• The 30-year Treasury yield climbed close to 5.5%, its highest level in over two decades.
• Investors expect the Federal Reserve may raise rates again after its first hike in three years last week.
• Silver fell about 4% for the week while platinum and palladium held steady.

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Gold prices edged lower on Friday, keeping the metal on track for its worst weekly performance in over three months. Spot gold traded around $4,271 an ounce, down more than 2% since the previous Friday.

The drop comes as energy prices remain high. Investors are watching to see if this will push the Federal Reserve to raise interest rates again.

Oil prices steadied on Friday after surging a day earlier. The gains came as the United States and Iran stayed locked in disagreement over reopening the Strait of Hormuz.

Iran Standoff Keeps Energy Markets on Edge

The Strait of Hormuz is a key route for global oil shipments. Negotiators are reportedly working on a phased deal.

Under the plan, Iran would reopen the waterway. In exchange, the United States would lift a blockade on an Iranian port.

🇺🇸🇮🇷 BREAKING: Iran offers U.S. a 7-DAY plan to reopen the Strait of Hormuz and restart negotiations, per FT.

Iranian Foreign Minister Abbas Araghchi says Hormuz could be reopened by the end of the seventh day if certain conditions are met, with broader talks also set to resume.… pic.twitter.com/TcnmfVrcZY

— Coin Bureau (@coinbureau) September 25, 2026

Until a deal is reached, oil prices are expected to stay high. That keeps pressure on inflation, which has been a central concern for policymakers.

Higher energy costs can slow the pace at which inflation cools down. This makes it harder for the Fed to ease off its current policy stance.

Last week, the Fed raised interest rates for the first time in three years. Markets are now trying to figure out if another increase is coming.

Treasury Yields Hit Multi-Decade High

Bond markets sold off sharply on Thursday. This came amid inflation fears tied to the jump in oil prices.

Concerns about growing government debt also weighed on bonds. The yield on the 30-year Treasury bond rose to nearly 5.5%.

That is the highest level for the 30-year yield in more than 20 years. Rising yields typically make bonds more attractive compared to gold.

Gold does not pay interest, so it tends to lose appeal when bond yields rise. This has been a key factor pressuring gold prices lower in recent weeks.

The US Dollar Index also rose slightly on Friday. It had already gained for five straight trading days.

A stronger dollar can make gold more expensive for buyers using other currencies. This adds another layer of pressure on the metal.

Despite the pullback, some investors see the drop as temporary. One hedge fund manager pointed to long-term factors that still support gold prices.

Analysts at ANZ said investment demand for gold has stayed steady. They noted there has been no large scale selling despite the tougher economic backdrop.

That suggests investors are not abandoning gold positions, even as prices soften. The metal’s near-term direction still depends heavily on oil, yields and the Fed’s next steps.

Other precious metals also moved lower this week. Silver fell about 4% for the week, trading near $63.68 an ounce.

Platinum and palladium prices were little changed on Friday. Both metals have avoided the sharper swings seen in gold and silver.

As of Friday morning trading in Singapore, spot gold sat at $4,271.54 an ounce, down 0.1% on the day. Gold futures, however, rose 0.3% to $4,309.72, showing a mixed picture across gold markets heading into the weekend.