prices headed for a third consecutive weekly fall, despite edging higher on Friday, as market expectations for a Federal Reserve interest rate hike strengthened, while traders awaited a key US inflation report later in the day.
Spot gold was down more than 2% for the week so far and up 0.3% for the day at $4,326.88 per ounce by 0020 GMT.
US gold futures for December delivery were down 0.9% at $4,367.70.
US Producer Price Index for final demand rose 0.4% in August, data on Thursday showed, after an upwardly revised 0.1% gain in July. Following this, traders nudged up bets that the Fed will raise interest rates at its meeting next week, and spot gold subsequently fell nearly 2%.
The US consumer price inflation report is due at 1230 GMT.
“A stronger-than-expected reading would reinforce the case for several interest rate increases, potentially pushing Treasury yields and the dollar higher and placing additional pressure on gold,” said Wael Makarem, financial markets strategist lead, Exness.
“Ongoing Middle East tensions could continue to weigh on gold through higher inflation expectations.”
Despite gold being known as an inflation hedge, rising interest rates often pressure the metal, which offers no yield.
Iran-aligned Houthis seized control of Yemen’s port city of Mocha and advanced down the Red Sea coast to strategic islands, military sources said, hours after US President Donald Trump said he expected the Iran war to end after the midterm elections.
Oil prices rose and both major benchmarks are on track to end the week at over $100-a-barrel level for the first time since mid-May.
Among other metals, spot silver fell 0.1% to $63.49 per ounce and slipped 4% for the week. Platinum gained 0.3% at $1,782.76, palladium rose 0.5% to $1,288.00, while both metals headed for weekly declines.