Gold was headed for its first monthly gain in five on Friday, as investors assessed the impact of the U.S.-Iran conflict and parsed the Federal Reserve's signals for clues on inflation and the path for interest rates.

FUNDAMENTALS

Spot gold inched 0.2% lower at $4,096.29 per ounce, as of 0107 GMT, but was headed for a weekly rise of 1.1%. U.S. gold futures for August delivery gained 0.1% to $4,094.10.

The metal was on track to gain more than 2.2% this month, its sharpest gain since February.

Spot gold rose 2% on Wednesday, after the Fed left interest unchanged at its latest policy meeting, and Chairman Kevin Warsh gave little indication on the central bank's next policy move.

Markets are now pricing in a 63% chance of a rate hike in September, down from about 80% prior to the policy meeting, according to CME Group's FedWatch tool. [FEDWATCH]

The dollar gained about 0.3%, after diving 2.4% in its biggest single-day drop since January 2023 on Thursday. [USD/]

A drone strike on gas vessels in Egypt's Mediterranean port of Damietta signalled a potential new front in the U.S.-Iran war, raising the prospect of threats to navigation through the Suez Canal, one of the last remaining export routes for Saudi oil.

U.S. inflation slowed in June, with the Personal Consumption Expenditures Price Index slipping 0.1% on a month-over-month basis, the weakest reading since April 2020, but the easing is likely to be temporary as renewed hostilities in the Middle East raise oil prices.

Global gold demand was steady year-on-year at 1,268.9 metric tons in the second quarter of 2026 as central banks sped up purchases, offsetting a slump in investment, the World Gold Council said on Thursday.

Spot silver held steady at $58.98 per ounce, platinum slid 1.3% to $1,638.97, and palladium fell 0.2% to $1,301.94.

DATA/EVENTS (GMT)

0600 UK Nationwide house price mm, yy Jul

0900 EU HICP Flash YY Jul

0900 EU HICP-X F, E, A, T Flash YY, MM Jul

1200 US U Mich Sentiment Final