Gold prices recorded a second consecutive weekly decline, with spot bullion settling at $4,216.64 per troy ounce on Friday, a drop of roughly 2.7 per cent. The week was marked by extraordinary volatility: in Asian trading on Thursday, the metal briefly plunged to $4,023, its lowest level of 2026, as heightened military tensions between the United States and Iran triggered a rush for liquidity. Prices subsequently recovered after reports emerged that the two sides had reached an understanding on the text of a written agreement, and as officials on both sides struck an optimistic tone. The rebound, however, was capped by persistent doubts over the trajectory of US inflation ahead of next week’s Federal Reserve policy meeting. Analysts in London note that even if oil prices ease, underlying price pressures could keep interest rates elevated, undermining the appeal of non-yielding assets.

The diplomatic thaw was felt most directly in Iran’s domestic markets. On Sunday, the first trading day of the week, gold and coin prices opened with a significant negative gap. The benchmark 18-karat gold gram fell to around 17.1 million tomans, while the Emami coin also retreated, reflecting both the softer global price and a wave of cautious optimism among Tehran traders. Yet the official exchange rate for the US dollar hawala inched up by 95 tomans to 148,614, with the euro and UAE dirham also posting modest gains. Viewed from Tehran, this divergence suggests that while political hopes have eased demand for physical gold as a hedge, structural pressures on the rial persist, leaving currency markets sensitive to any shift in the diplomatic narrative.

Beyond Iran, the interplay of geopolitics and monetary policy shaped sentiment across currency and bullion markets. In Bangladesh, the dollar held steady at 122.75 taka in interbank trading, but the euro, pound sterling, Indian rupee, Chinese yuan, and Australian and Singapore dollars all weakened, a pattern traders in Dhaka attributed to shifting regional flows. In Indonesia, gold traded at Rp 2.71 million per gram, with Jakarta-based observers predicting a potential rise if the Iran-US peace process gains traction, though they identified support levels at $4,058 and $3,929 per troy ounce that could be tested should the correction deepen.

Looking ahead, the precious metal’s path hinges on two interlinked uncertainties. The Federal Reserve’s assessment of inflation will set the tone for the dollar and real yields; any signal that rates could stay higher for longer would weigh on gold. At the same time, the Iran-US talks remain fragile. A formal agreement could further erode safe-haven demand, but a breakdown would likely reignite the kind of volatility that briefly sent prices tumbling below $4,100. For now, markets from Tehran to Jakarta are in a holding pattern, awaiting the next concrete signal from either central bankers or diplomats.