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Gold prices declined on Friday, extending their weekly losses amid heightened geopolitical tensions between the US and Iran. The precious metal fell below $1,510 per troy ounce as investors shifted to safer assets like the US dollar amid concerns over potential military escalation in the Middle East. The market remains focused on the upcoming US nonfarm payrolls report, scheduled for release later in the day, which could influence the dollar's strength and, consequently, gold prices.
The decline in gold highlights the delicate balance between geopolitical risks and economic data. While tensions in the Middle East typically drive demand for safe-haven assets, the stronger dollar pressured gold, which is priced in USD. Traders are closely monitoring whether the payrolls report will show a significant rebound in employment, which could strengthen the dollar and further weigh on gold. Conversely, weaker-than-expected data might prompt central banks to maintain accommodative policies, supporting gold as an inflation hedge.
For Gulf investors, the interplay between the dollar and geopolitical risks is critical. A stronger dollar could reduce the purchasing power of oil-dependent economies like Saudi Arabia, while prolonged Middle East tensions might increase demand for gold as a safe store of value. Traders should watch the payrolls report for clues about Fed policy and monitor Iran-US developments for potential market shocks.
