Gold steadied near 2-1/2 week highs on Friday, heading for its best week in a month on sagging risk appetite, but lost early gains after data showed a surprise spike in March U.S. producer prices.
Although market hopes have been increasing that the U.S. Federal Reserve will hold off on raising interest rates as soon as early next year, a 0.5 percent surge in the PPI index last month renewed concerns about potentially tighter monetary policy.
A day earlier, bullion hit its highest since March 24 at $1,324.40 an ounce bolstered by the Fed’s March meeting minutes which showed officials were not keen on increasing interest rates straight after unwinding bond purchases, as the markets had feared.
Spot gold was modestly lower near $1,318 an ounce, but was up 1.2 percent for the week and on track for its second straight week of gains. Gold futures for June delivery were down 0.1 percent to $1,319.40 an ounce.