Gold: XAU Back on the Defensive.

Gold prices dropped below $5,050 per ounce on Friday as a strengthening US dollar and fading expectations for interest rate cuts outweighed the traditional safe haven appeal of the precious metal. The dollar strengthened as investors sought liquidity following the announcement of the largest wave of strikes yet against Iranian targets and the effective closure of the Strait of Hormuz. While geopolitical volatility typically drives bullion demand, the threat of persistent inflation from crude oil prices exceeding $100 per barrel has shifted the focus toward yield bearing assets. Market participants have largely discarded the possibility of rate cuts in 2026 as rising energy costs complicate the path toward price stability. This surge in the greenback and Treasury yields has forced liquidations as investors sell gold to cover margin calls and raise cash. The metal is now set for a second straight weekly decline despite the ongoing regional conflict.