Gold Steadies After Sharp Drop as Fed, Middle East Risks Loom

Gold (XAU/USD) held steady on Friday, recovering slightly after a sharp decline of nearly 2% in the prior session. The stabilization comes as traders weighed renewed Middle East geopolitical risks against mounting expectations that the Federal Reserve may hike interest rates.

Surging oil prices have stoked inflation concerns, prompting market participants to price in a higher likelihood of Fed tightening. This hawkish shift weighed on gold, which is sensitive to rising rates, though safe-haven demand amid regional tensions provided some support.

The metal's near-term direction remains tied to oil price dynamics and Fed policy signals, as well as any escalation in Middle East conflict.