Gold fell on Friday and headed for a second weekly loss, as a slight rise in the dollar and an Israel-Iran truce weighed on prices, with markets eyeing U.S. inflation data for clues on the Federal Reserve's interest rate trajectory.

Spot gold fell 1% to $3,292.19 an ounce by 0402 GMT. Bullion has fallen 2.2% so far this week. U.S. gold futures fell 1.3% to $3,305.20.

The dollar (.DXY), opens a new tab, rose 0.2% against its rivals, making dollar-priced bullion more expensive for overseas buyers. The decline this week was driven by the Israel-Iran peace deal, said Brian Lan, managing director at GoldSilver Central in Singapore, adding that prices were consolidating with a slight downward bias and were likely to remain around current levels.

Iranians and Israelis have been trying to resume normal life after 12 days of the most intense confrontation between the two arch-foes and a ceasefire that came into effect on Tuesday.

Investors are awaiting U.S. core personal consumption expenditures data due at 1230 GMT for further insight into the Fed's monetary policy outlook, with analysts polled by Reuters expecting a 0.1% monthly rise and a 2.6% annual increase.

Markets are currently pricing in 63 basis points of interest rate cuts this year, starting in September.

U.S. President Donald Trump has said that subdued inflation means the Fed should lower its policy rate already, but so far only two Fed policymakers have backed the possibility of a rate cut at the central bank's July meeting.

Gold thrives in a low-interest environment because it is a zero-yielding asset. "I think what's probably happening is some of the price is leaving gold and finding its way into other precious metals, like platinum and palladium… So there's probably a speculative rotation going on," said Marex analyst Edward Meir.

Spot silver fell 0.7% to $36.38 an ounce, platinum fell 2.2% to $1,386.75, after hitting its highest in almost 11 years, while palladium rose 0.9% to its highest since October 2024 at $1,142.49. (alg)

Source: Reuters