Gold prices gained on Friday as rising inflation fears buoyed its safe-haven appeal, although a stronger dollar and expectations that central banks would hike interest rates early kept bullion on course for its first weekly decline in three.
Spot gold rose 0.3% to $1,863.10 per ounce by 1324 GMT. US gold futures edged up 0.1% to $1,863.30.
The dollar was set to post its fourth week of gains, making gold more expensive for those holding other currencies, as traders wager on interest rates rising faster.
Higher interest rates translate into an increased opportunity cost of holding the non-interest-bearing metal.
US Federal Reserve policymakers are pencilling in the possibility of earlier interest rate hikes than they thought would be needed just a few months ago.
Gold gains as inflation worries offset strong dollar
"The Fed announcing a rate hike at some point next year is gold negative, (but) there is still a lot of uncertainty, a lot of inflation concern to help gold stay supported in this environment," said UBS analyst Giovanni Staunovo.
The potential for inflation to keep moving even higher could propel gold to move above $1,900 an ounce, Staunovo added.
Investors are keeping a close tab on US President Joe Biden's nominee as the next chair of the Fed, with analysts expecting a potential appointment of Lael Brainard, considered to be more dovish than Jerome Powell, to trigger further gains in gold.
While elevated inflation has "enticed strong buying interest in gold, expectations of policy normalization by the US Fed and other major central banks amid a sharp recovery in growth remains the key headwind for the metal," said Sugandha Sachdeva, vice president of commodity & currency research at Religare Broking.
Elsewhere, spot silver was little changed at $24.77 per ounce, platinum was down 1.4% at $1,033.81, and palladium fell 3.1% to $2,067.03.
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