Gold prices extended their decline during Asian trading on Friday, retreating further from their highest level since 5 June as traders assessed the outlook for United States interest rates and heightened geopolitical tensions.
By 3:55 pm AEST (5:55 am GMT), spot gold was down 0.5% at US$4,329.65 an ounce.
The precious metal found some support near the US$4,300 level, however, as mixed fundamental signals discouraged traders from taking aggressive directional positions.
U.S. producer prices were unchanged in July, according to data released on Thursday, falling short of expectations for a 0.2% increase.
The annual PPI rate also slowed to 4.7% from 5.5% in June, below economists' expectations for 4.9%.
The data, together with Wednesday's consumer price index report, pointed to easing inflationary pressures and could give the Federal Reserve greater scope to keep interest rates unchanged.
Fed funds futures are now pricing in a 67.6% probability of a rate hike by year-end, down from 77.1% a week earlier, according to the CME Group FedWatch Tool.
However, geopolitical uncertainty could continue to support the U.S. dollar and weigh on gold.
Treasury Secretary Scott Bessent said the U.S. would introduce measures against Iran that have "never been seen" before.
Tensions surrounding the Strait of Hormuz have also kept the war-risk premium elevated and provided support for the U.S. dollar.
President Donald Trump again claimed that the U.S. has "total control" over the strategic waterway, while Iran pledged to keep the strait closed until its demands are met.
Elsewhere, Iran-backed Houthi forces in Yemen intensified attacks on vessels in the Red Sea and Bab el-Mandeb Strait and claimed responsibility for a drone strike on a Saudi Aramco refinery.
Investors will now turn their attention to U.S. monthly retail sales and the preliminary University of Michigan consumer sentiment index for further direction during Friday's session.
