Gold prices were little changed in Asian trading on Friday as investors weighed reports that the U.S. and Iran were close to extending their ceasefire agreement, while persistent inflation concerns kept bullion under pressure.
Spot gold was muted at $4,495.9 an ounce. U.S. Gold Futures edged down 0.1% to $4,526.17 an ounce.
Gold fell to a two-month low in the previous session, but erased losses to settle 0.8% higher after reports suggested the U.S. and Iran would resume negotiations.
Market sentiment improved after reports said Washington and Tehran had reached a tentative agreement to extend a 60-day ceasefire and allow shipping through the Strait of Hormuz, although the proposal still awaits approval from U.S. President Donald Trump and confirmation from Iran.
Typically, geopolitical tensions boost demand for safe-haven assets like gold. But investors now worry that higher oil and energy costs from the Middle East crisis could fuel broader inflation pressures, forcing the Federal Reserve to maintain restrictive monetary policy.
"Markets remain cautious over whether diplomatic progress will hold, while concerns over higher energy prices continue to fuel inflation risks," ING analysts said.
Data released on Thursday showed the U.S. personal consumption expenditures (PCE) price index rose 3.8% year-on-year in April, the fastest pace in roughly three years. The hotter inflation data reinforced expectations that the Fed will keep borrowing costs elevated well into next year.
Among other precious metals, silver prices edged down 0.2% to $75.52/oz, while platinum fell 0.4% to $1,915.3/oz.
