Gold prices declined in European markets on Friday, extending their losses for the third consecutive day and moving further away from a four-week high due to ongoing correction and profit-taking, and under pressure from the continued recovery of the U.S. dollar in the foreign exchange market.

Despite this decline, gold is on track to achieve its fourth consecutive weekly gain, as investors await further developments regarding the peace talks between the United States and Iran.

Price Overview

- Gold Prices Today: Gold metal prices fell by 0.45% to ($4,767.81), from the opening level of ($4,789.10), and recorded a high of ($4,806.46).

- Upon price settlement on Thursday, gold prices lost less than 0.1%, marking the second consecutive daily loss amid continued correction and profit-taking from a four-week high of $4,871.34 per ounce.

Weekly Trading

Throughout this week's trading, which officially concludes with today's price settlement, gold prices are up by approximately 0.75% so far, on the verge of securing a fourth consecutive weekly gain.

The U.S. dollar slid to its lowest level in six weeks earlier this week as the Israel-Lebanon truce, combined with prospects for resuming U.S.-Iranian talks, prompted investors to liquidate their long positions in the American currency.

The U.S. Dollar

The dollar index rose on Friday by 0.1%, extending its gains for the second consecutive session as it continues to recover from a six-week low, reflecting the ongoing ascent of the American currency against a basket of major and minor currencies.

In addition to dip-buying, the dollar is being buoyed by renewed demand as an alternative investment of choice, given the current uncertainty dominating the peace talks between the United States and Iran.

According to some media reports, American and Iranian negotiators have lowered their ambitions for a comprehensive peace agreement and are now seeking a temporary memorandum of understanding to prevent a return to conflict, with the nuclear file remaining a major obstacle.

U.S. President Donald Trump stated that the next round of peace talks between the United States and Iran could take place over the weekend.

Global Oil Prices

Global oil prices rose on Friday by an average of 0.75%, continuing their ascent for the second consecutive session as part of a recovery from multi-week lows, amid fears of the continued closure of the Strait of Hormuz to supertankers.

Undoubtedly, the rise in global oil prices renews fears of accelerating inflation, which may prompt global central banks to raise interest rates in the near term—a sharp shift from pre-war expectations of cutting or holding rates steady for a long period.

U.S. Interest Rates

- According to the FedWatch tool of the CME Group: the pricing of the probabilities of keeping U.S. interest rates unchanged at the April meeting is currently stable at 99%, and the pricing of the probabilities of raising interest rates by about 25 basis points is at 1%.

- In order to re-price those probabilities, investors are closely following the release of more economic data from the United States.

Gold Performance Expectations

Tim Waterer, chief market analyst at KCM Trade, said: Investors are closely monitoring any tangible progress in the U.S.-Iranian negotiations. Any progress or extension of the current fragile ceasefire could help calm oil markets and inflation fears, which could allow for a further rise in gold prices.

SPDR Fund

Gold holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, increased on Wednesday by about 1.15 metric tons, marking the third consecutive daily increase and bringing the total to 1,052.91 metric tons, which is the highest level since April 8.

The euro declined during Friday's trading against a basket of global currencies, extending its losses for the second consecutive day against the U.S. dollar and moving away from a seven-week high amid ongoing correction and profit-taking.

This decline is further supported by the continued recovery of the American currency from recent lows, as investors avoid risk due to the ambiguity surrounding peace negotiations between the United States and Iran. 

Following the current rise in global oil prices, signs of growing inflationary pressures on monetary policy makers at the European Central Bank (ECB) have increased, reviving the probability of raising European interest rates this year.

Price Overview

- Euro Exchange Rate Today: The euro fell against the dollar by approximately 0.1% to ($1.1773), from today's opening price of ($1.1782), and recorded a high of ($1.1787).

- The euro ended Thursday's trading down by 0.15% against the dollar, marking its first loss in the last nine days due to correction and profit-taking, after having earlier recorded a seven-week high of $1.1824.

Weekly Trading

Throughout this week's trading, which officially concludes with today's price settlement, the single European currency is currently up by 0.5% against the U.S. dollar, on track to achieve its third consecutive weekly gain.

The U.S. dollar slid to its lowest level in six weeks earlier this week as the Israel-Lebanon truce, combined with prospects for resuming U.S.-Iranian talks, prompted investors to liquidate their safe-haven positions.

The U.S. Dollar

The dollar index rose on Friday by 0.1%, extending its gains for the second consecutive session as it continues to recover from a six-week low, reflecting the ongoing ascent of the American currency against a basket of global currencies.

In addition to dip-buying, the dollar is being buoyed by renewed demand as an alternative investment of choice, given the current uncertainty dominating the peace talks between the United States and Iran.

According to some media reports, American and Iranian negotiators have lowered their ambitions for a comprehensive peace agreement and are now seeking a temporary memorandum of understanding to prevent a return to conflict, with the nuclear file remaining a major obstacle.

U.S. President Donald Trump stated that the next round of peace talks between the United States and Iran could take place over the weekend.

Global Oil Prices

Global oil prices rose on Friday by an average of 0.75%, continuing their ascent for the second consecutive session as part of a recovery from multi-week lows, amid fears of the continued closure of the Strait of Hormuz to supertankers.

Undoubtedly, the rise in global oil prices renews fears of accelerating inflation, which may prompt global central banks to raise interest rates in the near term—a sharp shift from pre-war expectations of cutting or holding rates steady for a long period.

European Interest Rates

- With the rebound in global oil prices, money market pricing of the probability of the European Central Bank raising European interest rates by about 25 basis points in April rose from 15% to 20%.

- In order to re-price the above probabilities, investors await the release of more economic data in the eurozone regarding levels of inflation, unemployment, and wages.

- ECB President Christine Lagarde stated that the bank is prepared to raise interest rates even if the expected rise in inflation is short-term.

- Sources told Reuters that the ECB is likely to begin discussing interest rate hikes during this month's meeting.

The Japanese yen declined in the Asian market on Friday against a basket of major and minor currencies, extending its losses for the third consecutive day against the U.S. dollar. This comes as the American currency continues to recover from recent lows, driven by investor risk aversion due to the ambiguity surrounding peace negotiations between the United States and Iran.

Amid the current rise in global oil prices, signs of growing inflationary pressures on policymakers at the Bank of Japan (BoJ) are increasing, which strengthens the probability of Japanese interest rate hikes in the near term.

Price Overview

- Japanese Yen Exchange Rate Today: The dollar rose against the yen by more than 0.2% to (¥159.47), from today's opening price of (¥159.12), and recorded a low of (¥159.02).

- The yen ended Thursday's trading down by 0.1% against the dollar, marking its second consecutive daily loss as markets evaluated developments in the Middle East peace talks.

The U.S. Dollar

The dollar index rose on Friday by 0.1%, extending its gains for the second consecutive session as it continues to recover from a six-week low, reflecting the ongoing ascent of the American currency against a basket of global currencies.

In addition to dip-buying, the dollar is being buoyed by renewed demand as an alternative investment of choice, given the current uncertainty dominating the peace talks between the United States and Iran.

According to some media reports, American and Iranian negotiators have lowered their ambitions for a comprehensive peace agreement and are now seeking a temporary memorandum of understanding to prevent a return to conflict, with the nuclear file remaining a major obstacle.

U.S. President Donald Trump stated that the next round of peace talks between the United States and Iran could take place over the weekend.

Global Oil Prices

Global oil prices rose on Friday by an average of 0.75%, continuing their ascent for the second consecutive session as part of a recovery from multi-week lows, amid fears of the continued closure of the Strait of Hormuz to supertankers.

Undoubtedly, the rise in global oil prices renews fears of accelerating inflation, which may prompt global central banks to raise interest rates in the near term—a sharp shift from pre-war expectations of cutting or holding rates steady for a long period.

Japanese Interest Rates

- The pricing of the probability of the Bank of Japan raising interest rates by a quarter-percentage point at the April meeting is currently stable around 10%.

- In order to re-price those probabilities, investors await the release of more data on the levels of inflation, unemployment, and wages in Japan.

Asia finds itself trapped between an energy market it cannot afford to see rise and supply chains that may take weeks to return to normal operation—even in the best-case scenarios.

Negotiations continue, though they are no longer being conducted directly in Islamabad. What lies ahead is a complex and volatile path built on political escalation, diplomatic maneuvering, and "balancing game" theories among parties until one side is forced to blink. This process is expected to be messy and could leave significant marks on Asia-Pacific economies.

Even with a gradual return of shipments through the Strait of Hormuz, new cargoes will need three to six weeks to reach Asian ports. Furthermore, the region's crude oil infrastructure, primarily designed to handle Gulf grades, remains effectively disrupted. In contrast, Atlantic Basin oil has become economically unfeasible, while Gulf supplies are no longer arriving normally.

Consequently, a two-week truce does not resolve these imbalances, and the repercussions for diesel, gasoline, liquefied petroleum gas (LPG), and naphtha will be deep and wide-ranging.

The Hard Landing Scenario

In the worst-case scenario—should the conflict reignite and the Strait of Hormuz effectively close for six months, sending Brent crude to $200 per barrel—Asia would face a crisis of a completely different magnitude.

This scenario is often compared to the 1997 Asian Financial Crisis, which was essentially a crisis of currency imbalances, weak reserves, and economic policies unprepared for sharp external shocks. While many Asian economies are stronger today, with larger reserves, better currency management, and more resilient debt structures, the risks cannot be ignored.

A sustained energy shock of this scale would strain national budgets, widen current account deficits, and increase pressure on currencies, especially in energy-importing emerging Asian economies with high debt and limited reserves.

Asian nations might be forced back to the crisis-management tools used during the COVID-19 pandemic: demand reduction, utilization of strategic reserves, rationing systems, and accelerating fuel switching. However, these measures are politically difficult and carry heavy social and economic costs.

Energy Security and Supply Continuity

Asian liquefied natural gas (LNG) prices have seen a relative decline with the truce. However, if the conflict resumes, prices exceeding $20 per million British thermal units (MMBtu) become a likely scenario, pushing the region to reverse the previous trend of switching from coal to gas and returning once again from gas to coal.

This raises two key questions for policymakers:

- Which Asia-Pacific markets can actually switch between coal and gas?

- Will the reassessment of LNG as a geopolitically fragile source accelerate the move away from it, despite climate commitments?

From Crisis Management to Structural Reform

While absorbing the shock of the Iran crisis will push policymakers toward difficult short-term measures, the most critical challenge lies in turning these pressures into long-term reforms that bolster energy security.

This includes enhancing energy source diversity, developing domestic production, and building greater demand flexibility, all while avoiding retaliatory policies between nations.

Three international experiences are highlighted as significant models:

- Brazil: Developed a comprehensive biofuel framework through production blending policies and investment incentives, reducing reliance on imported oil and creating a sustainable competitive advantage.

- China: Adopted a broad strategy for relative energy self-sufficiency through massive investments in coal, solar, wind, and nuclear energy, alongside expanding electric vehicles and managing strategic reserves, reducing its relative dependence on imports.

- Norway: Successfully channeled oil and gas revenues into a massive sovereign wealth fund to support financial stability, with a domestic electricity system relying almost entirely on hydropower, reducing exposure to fossil fuel price shocks.

Energy Pragmatism as a Future Choice

The common denominator among these models is that energy security did not happen by accident; it was achieved through long-term policies, patient investment, and a strategic vision that endures short-term costs.

Asian governments today face a decisive moment revealing that reliance on imported energy, coupled with weak budgets and currency reserves, creates a vulnerability that is difficult to hedge with diplomacy alone.

The appropriate response lies not only in managing the current crisis but in building more resilient infrastructure, developing demand flexibility, enhancing strategic stockpiles, and fostering greater integration among Asian energy markets.

The window for action remains open during crisis periods, but utilizing it requires swift and radical decisions. Countries that move now toward strengthening energy security will enter the next crisis from a position of greater strength and stability.