Gold prices fell on Friday as the recent rally lost momentum and traders booked profits after bullion reached its highest level in more than two months.
Spot gold fell 0.1% to $4,344.24 per ounce by 0851 GMT. The decline extended losses from the previous session, when gold dropped 1.3% and gave up most of its weekly gains.
Meanwhile, US gold futures for December delivery declined 0.4% to $4,400.40 per ounce.
Saxo Bank analyst Ole Hansen said profit-taking had emerged after gold’s strong run. He added that subdued US inflation data and reduced expectations for further interest rate hikes had largely been priced into the market.
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Gold reached its highest level since June 5 on Thursday. However, Hansen said the metal was now trading within a $4,200 to $4,500 range, with $4,500 representing its 200-day moving average.
US producer prices remained unchanged in July after a revised 0.1% decline in June. Meanwhile, consumer prices recorded only a modest increase last month as gasoline costs fell for a second consecutive month.
Market expectations for US monetary policy have also shifted. According to the CME FedWatch Tool, traders now see a 33% chance of a rate hike in September, down from about 44% a week earlier.
Lower interest rates generally support gold because the precious metal does not pay interest.
However, physical demand showed signs of weakening in Asia. Gold discounts in India widened to their highest level in more than two months as higher prices reduced consumer demand. Interest in China also remained subdued.
Elsewhere, oil prices climbed after Washington threatened an open-ended naval blockade on Iran, raising concerns about potential disruptions to global supplies.
Among other precious metals, spot silver gained 0.3% to $64.67 per ounce. Platinum rose 0.4% to $1,723.64, while palladium advanced 0.2%. Both platinum and palladium remained on track for weekly declines.
