Gold prices edge lower on inflation worries and rate hike expectations

Spot gold was down 0.3 per cent at $4,200.82 per ounce, as of 0101 GMT, and was set for a weekly loss of 2.8 per cent. US gold futures for August delivery rose 2.6 per cent to $4,222.10.

Gold fell to an over six-month low on Thursday before closing higher at $4,219.69 as US President Donald Trump called off planned military strikes on Iran and signaled an imminent peace deal.

President Donald Trump on Thursday said the United States and Iran could sign a peace deal as soon as this weekend that would reopen the Strait of Hormuz to shipping, but Iran countered that it had not reached a final decision on an agreement.

US producer prices increased more than expected in May, leading to the largest annual gain in 3-1/2 years as the West Asia conflict drove up the cost of energy products.

Traders are currently pricing a 60 per cent chance of a US rate hike in December, according to the CME Group’s FedWatch tool.

While gold is seen as a hedge against inflation, higher interest rates tend to weigh on the non-yielding metal.

DBS Group, Singapore’s biggest bank by assets, said on Thursday it will offer tokenised physical gold to retail customers as demand for the precious metal grows and the city-state pushes to become a gold trading hub.

Spot silver fell 0.4 per cent to $67.11 per ounce, platinum gained 0.3 per cent to $1,724.45, while palladium rose 1 per cent to $1,281.75.