• Spot gold little changed after US PPI data, last down 0.5% at $4,382.22/oz.
  • Soft PPI reading eases inflation concerns, but geopolitical risks and oil prices cap bullion's losses.
  • Traders see continued consolidation, with potential for upside surprises.

Gold prices steadied on Friday after a brief dip, as a softer-than-expected US producer price index (PPI) reading tempered inflation fears, though persistent geopolitical tensions and rising oil prices provided some support. Spot gold was last down 0.5% at $4,382.22 per ounce, hovering near the mid-$4,300s after the data.

The US PPI rose less than forecast in the latest month, signalling a potential easing of price pressures that had fueled expectations of aggressive Federal Reserve rate hikes. This initially pressured bullion, as softer inflation reduces the urgency for higher rates, which typically weigh on non-yielding assets.

However, the metal found some footing as traders weighed the implications for monetary policy. "The PPI reading suggests the Fed may have room to slow its pace of tightening, which is supportive for gold over the longer term," noted one market analyst. "But in the near term, the geopolitical backdrop and energy prices remain key drivers."

Geopolitical risks, particularly in the Middle East, continue to underpin safe-haven demand, while oil prices have edged higher, adding to inflation concerns. Analysts suggest that if crude moves higher or inflation data surprise to the upside, gold could see a temporary uplift.

"We're likely to see further consolidation around current levels," said a precious metals strategist. "The market is in a wait-and-see mode, trying to gauge the Fed's next move. Any significant shift in expectations could trigger a breakout."

The dollar index was slightly firmer, limiting gold's upside. Investors now look to upcoming speeches by Fed officials and key economic data for further direction.

Correction: An earlier version of this article misstated the price change. Gold was down 0.5% at $4,382.22, not up as previously reported.