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Gold Stays Near Seven-Month Low as US Dollar Weakens

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Gold was mostly steady early on Friday, holding near multi-month lows reached this week as the U.S. dollar fell off a seven-month high.

Gold for August delivery was last seen up US$5.80, or 0.1%, to US$4,053 per ounce.

The price of the precious metal is sticking near more than seven-month lows touched on Wednesday after a report on Thursday showed U.S. inflation rose again last month, with the May personal consumption expenditures index, the Federal Reserve's preferred inflation measure, rose at a 4.1% annualized pace, matching expectations but up from 3.8% in April.

Rising prices due to high energy costs are lifting expectations for higher interest rates, boosting the dollar, as the Federal Reserve's policy committee left rates unchanged recently but warned a hike may come later this year.

"Gold is trading around USD 4,000 for a third consecutive session and is heading for a fourth weekly loss, with investor sentiment still shaken by the recent selloff as markets adjust to the twin headwinds of a hawkish Fed and a stronger dollar," Saxo Bank said in a note.

The dollar eased off the highest since early November, with the ICE dollar index down 0.32 points to 101.11. Treasuries were mixed, with the yield on the U.S. two-year note down 2.4 basis points to 4.111%, while the 10-year note was little changed at 4.396%.

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