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Gold prices increased on Friday and were on track for their first weekly rise in four weeks, as US economic data suggested a decrease in price pressures, raising hopes of a potential rate cut by the Federal Reserve.
As of 0654 GMT, spot gold was up 0.4% at $2,311.39 per ounce, with a 0.5% gain for the week so far.
US gold futures also rose 0.4% to $2,326.40, according to Reuters.
ANZ commodity strategist Soni Kumari stated, "Market sentiment is leaning towards two interest rate cuts this year due to softening inflation numbers, creating a favourable environment for the Fed."
However, short-term fluctuations in gold prices may occur due to sentiment, providing a buying opportunity for investors who missed the initial rally.
Recent data indicated a decline in US producer prices in May, reinforcing the expectation of a Fed rate cut in September. Traders are now seeing a 67% probability of a rate cut in September, compared to 63% prior to the producer prices data.
Lower interest rates would decrease the cost of holding non-yielding bullion.
"Continued weakness in inflation would be beneficial for gold, as it would enhance its appeal during potential rate cuts this year," said Kyle Rodda, a financial market analyst at Capital.com.
Spot silver, platinum, and palladium also saw price increases on Friday, but all three metals were still set for weekly losses.
