Spot gold weakened on Friday and was on track to record a second consecutive weekly loss as investors wrestled with strong inflation signals and elevated odds of further U.S. interest rate tightening. By 22:27 ET (02:27 GMT), spot gold was down 0.6% at $4,186.99 an ounce, leaving the metal poised to drop more than 3% for the week.
In contrast, U.S. Gold Futures for December delivery rose, gaining 2.2% to $4,206.80 amid renewed optimism about a diplomatic breakthrough in the Middle East.
Gold had slid to a six-month low on Thursday, before paring losses later in the session. The reversal followed comments from U.S. President Donald Trump that Washington and Tehran could sign a peace agreement as soon as this weekend, a development that could reopen the Strait of Hormuz and ease concerns about global energy supply disruptions. Those comments helped push gold 3.5% higher by the close on Thursday.
Despite the upbeat tone from Washington, Iranian officials cautioned that no final agreement had yet been reached, leaving the regional outlook uncertain and capping the metal's rebound.
Market sentiment more broadly improved on hopes for a diplomatic resolution. Oil prices tumbled sharply after the U.S. comments, and global equity markets rallied on the prospect of reduced geopolitical risk.
Gold has faced headwinds in recent weeks as investors increasingly focus on the potential for tighter monetary policy. Because bullion does not yield interest, higher rates raise the opportunity cost of holding gold versus interest-bearing assets, reducing its appeal to some market participants.
Fresh U.S. data on Thursday underlined lingering inflationary pressures. Producer prices in May rose by more than expected, posting the largest annual increase in three-and-a-half years as elevated energy costs filtered through the economy. The data prompted traders to add to bets that the Federal Reserve could resume policy tightening later in the year; markets are pricing roughly a 60% chance of a rate increase by December.
Other precious metals moved modestly on Friday. Spot silver fell 0.5% to $67.00 an ounce, while platinum advanced 0.6% to $1,734.08 an ounce.
The interplay between geopolitical developments and domestic inflation data has left commodity markets sensitive to shifts in both diplomatic signals and macroeconomic indicators. For now, tentative peace hopes have limited gold's decline, even as stronger inflation readings and rising Fed-hike odds continue to put downward pressure on the metal.