Precious Metals Fall on Hawkish Fed Outlook

Gold and silver prices extended their decline, heading for a third consecutive weekly loss amid expectations of a continued hawkish monetary policy from the U.S. Federal Reserve. The downward pressure on precious metals was also attributed to a perceived easing of geopolitical tensions, which has curbed some safe-haven demand.

Strong US Dollar Supported by Fed Stance and Yields

The U.S. Dollar remained supported, with analysts citing the Federal Reserve's firm policy stance, strong U.S. economic data, and significant foreign investment inflows into U.S. securities. This strength is creating policy divergence with other major economies, as interest rate differentials are expected to constrain the Euro and maintain pressure on the Japanese Yen.

Easing Geopolitical Tensions Reduce Market Risk

Reports of de-escalation in the Middle East have influenced market sentiment, reportedly reducing demand for safe-haven assets like silver. A U.S. official announced a ceasefire agreement between Israel and Hezbollah, while the reopening of the Strait of Hormuz has allowed oil tanker traffic to resume, steadying crude prices. Separately, Iran confirmed a planned meeting with the U.S. was postponed but that a memorandum had been signed digitally.

Global Central Banks Pursue Divergent Policies

Central banks around the world demonstrated differing policy approaches, contributing to currency market volatility. Russia's central bank trimmed its key interest rate, while the Bank of England held its rate steady, which put pressure on the British Pound. In Japan, the Yen's continued weakness against the strong U.S. Dollar has brought it to levels that have previously triggered official intervention, increasing market speculation.