Gold edged higher on Friday as the dollar weakened, but the metal was still on track for a small weekly loss as investors weighed signals from the Federal Reserve on interest rates.
Spot gold rose 0.2% to $4,177.82 per ounce by 0433 GMT, but was down 0.5% so far in the week.
US gold futures for December delivery climbed 0.7% to $4,199.10.
“Gold has been trapped in a range of $4,221, with the bottom of the range at $4,075 being met earlier this week,” said Kelvin Wong, a senior market analyst at OANDA.
“Inflationary trends still remain hot as the core CPI data and core PPI data for September are hitting beyond expectations.”
The US dollar headed for its first weekly fall in five weeks, making greenback-priced bullion more affordable for buyers overseas.
US producer prices increased by the most in 4-1/2 years last month amid rising costs for goods and services, in the latest sign that inflationary pressures are broadening beyond energy-related products.
The data followed Wednesday’s consumer price report, which showed prices accelerated in September on a surge in gasoline costs.
Traders are pricing in a 28% probability of a rate hike later this month and 89% chance of an increase in December, according to CME’s FedWatch Tool.
Chicago Fed President Austan Goolsbee said this week’s stronger-than-expected inflation data had been “discouraging”, while Fed Bank of Cleveland President Beth Hammack said the Fed might need to hike rates more aggressively if there were a notable deterioration in the public’s inflation expectations.
While gold is considered a hedge against inflation, higher interest rates reduce the appeal of the non-yielding asset.
In India, several large mutual funds issued public notices late on Thursday suspending bulk subscriptions to gold exchange-traded funds, just ahead of the festive season when investor demand typically rises.
Among other metals, spot silver rose 0.7% to $57.81 per ounce, platinum gained 1.1% to $1,642.75 and palladium climbed 1.5% to $1,143.46.
However, all three metals headed for weekly losses.