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Gold prices edged lower during Asian trading on Friday, but the precious metal remained on track to post its first monthly gain since February as investors balanced easing inflation concerns against uncertainty surrounding the Iran conflict and the outlook for U.S. interest rates.
Spot gold slipped 0.3% to $4,089.63 an ounce, while gold futures declined 0.2% to $4,090.70 per ounce. Despite the modest pullback, spot gold was still up roughly 2.1% for July, ending a string of monthly losses driven by fears that elevated oil prices would keep inflation high and force central banks to maintain a hawkish stance.
Investor sentiment improved after U.S. core Personal Consumption Expenditures (PCE) inflation, the Federal Reserve's preferred inflation measure, came in softer than expected for June. The data eased concerns that policymakers would need to raise interest rates immediately, providing support for non-yielding assets such as gold.
Meanwhile, reports that Iran and Oman were engaged in discussions over the Strait of Hormuz also helped calm market nerves. The prospect of reduced geopolitical tensions weighed on oil prices, lowering fears of renewed inflationary pressure from energy markets.
Earlier this week, the Federal Reserve kept interest rates unchanged, as widely expected. However, Fed Chair Kevin Warsh avoided giving a clear signal on the timing of future policy moves, while reaffirming the central bank's commitment to returning inflation to its 2% target. Despite softer inflation data, core PCE remains above that goal, and markets continue to expect at least one additional rate hike before the end of the year.
A weaker U.S. dollar also supported the broader metals market after the Japanese yen surged on reports of another intervention by Japanese authorities in currency markets.
Among precious metals, platinum outperformed with a 5.2% gain in July and a 2.6% weekly advance. Silver remained largely unchanged for the month but was modestly higher for the week. Copper prices also strengthened, supported by dollar weakness, expectations of tighter supply, and improving industrial demand, with both London Metal Exchange and COMEX copper futures posting solid monthly gains.
