Gold prices rose on Friday and were heading for their first weekly gain in four as a preliminary deal on US infrastructure spending drove a dollar retreat, while investors awaited inflation data, reports Reuters.
Spot gold gained 0.4 per cent to $1,782.74 per ounce at 1106 GMT on the day, and was up over 1.0 per cent for the week. US gold futures were 0.4 per cent higher at $1,782.90 an ounce.
Platinum was heading for best week since mid-March.
While the weaker dollar is helping, gold is struggling to regain investor confidence after last week's US Federal Reserve Bank meeting, Commerzbank analyst Daniel Briesemann said.
A surprise hawkish tilt from the Fed had driven a sharp slide in bullion.
However, the spending plan should be positive for gold, as it has to be financed to a large extent with higher debt, Briesemann added.
Progress on the plan weighed on the dollar index, making gold cheaper for those holding other currencies, ahead of US producer price data that could paint a clearer picture on rising inflation.
But investors in gold, considered an inflation hedge that also benefits from a lower interest rate environment since it translates into reduced opportunity cost of holding bullion, were still trying to process mixed signals from the Fed.
Two Fed officials warned on Thursday that inflation could rise more than policymakers' expectation near term, after Fed chief Jerome Powell said it would not be the only determinant of interest rate decisions.
UBS analyst Giovanni Staunovo said platinum has also come under pressure, further dampened by its lower liquidity compared to gold and concerns that rate hikes could slow economic growth.
On Thursday, two Fed officials warned that inflation could rise more than policymakers' expectation in the near term. Other US central bank policymakers said employment needed much more improvement after job losses during the pandemic.
Data showed fewer Americans filed new claims for unemployment benefits last week as the labour market steadily recovers from the pandemic amid a reopening economy.
New orders for key US-made capital goods unexpectedly fell in May, likely held back by shortages of some products, but a solid increase in shipments suggested business spending remained strong in the second quarter.
The Bank of England said inflation would surpass 3% as Britain's locked-down economy reopens, but the climb further above its 2% target would only be "temporary" and most policy makers favoured keeping stimulus at full throttle.
Some investors view gold as a hedge against higher inflation that could follow stimulus measures.
Elsewhere, platinum advanced 0.9 per cent to $1,101.64 per ounce while silver rose 0.8 per cent to $26.15.
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