Gold muted on Friday, but were holding onto sharp losses for the week as concerns about early interest rate cuts grew which hit the golden metal hard.

Spot gold dipped 0.1% to $$2,020.91 per ounce, meanwhile gold futures steadied at $2,022.75 per ounce. The two were poised to drop 1.4% during the week.

After plunging to a one-month low on Wednesday, the price of bullion saw some support at $2,000 per ounce due to demand from investors seeking safe haven investments.

However, when the Middle East armed war intensified and took new turns, the yellow metal continued to receive some support from the need for safe havens. Tensions between Iran and Pakistan increased following a string of strikes, while US and UK soldiers battled the Houthi militia, which is led by Iran, in the Red Sea.

The main cause of gold's decline was traders' shift toward the greenback as a result of positive economic data and hawkish remarks made by Fed officials, which caused markets to further price in projections for a rate decrease in March.

The main factor pressuring gold prices was the waning belief that the Fed will start lowering interest rates as early as March 2024.