Gold prices extended their fall by about 2% as the US dollar strengthened its value after US President Donald Trump revealed that the war on Iran will be escalated in two to three weeks.
At 8.30 am, the price of gold was at $4,676, down 1.71% since it opened in early trading on Friday in the Asian session.
Geopolitical tensions again peaked when US President Donald Trump signaled to end Iran's operations in the near future.
He also warned that Washington could potentially target Iran's energy and oil infrastructure if no agreement is reached.
This development was supported by provocative actions when he shared a video of a bridge explosion in Iran through the Truth Social platform, thus reflecting the increasing pressure on Tehran.
According to reports, the bridge is believed to be used by the Iranian military to secretly transfer missiles and related components from Tehran to a launch site in the western part of the country.
At the same time, regional conflicts continue to escalate with reports of new explosions in Baghdad. Iranian President Masoud Pezeshkian, however, insisted that Iran has no intention of expanding the conflict in the region.
On the economic front, US data showed a mixed picture as the trade deficit widened in February as a surge in imports outpaced export growth.
However, the labor market remained strong as Initial Jobless Claims for the week ended March 28 fell to 202,000, below market expectations of 212,000.
In contrast, a report from Challenger, Gray & Christmas showed a sharp increase in layoffs, with 60,620 in March, up more than 24% from the same period a year earlier.
In the bond market, the yield on the 10-year US Treasury note held steady at around 4.311% after falling nearly four basis points earlier, reflecting cautious investor sentiment.
Meanwhile, Dallas Fed President Lorie Logan said that current monetary policy remains appropriate in the face of economic uncertainty, but warned that geopolitical tensions in the Middle East could weigh on growth prospects.
Market data, meanwhile, shows expectations that the Federal Reserve is likely to keep interest rates unchanged throughout 2026, reflecting a cautious approach in an uncertain global environment.
