Gold Prices Poised for Weekly Gain Amid Weaker Dollar and Easing Inflation

Gold prices were on track to gain about 1% for the week and nearly 2% for July, supported by a weaker US dollar, easing inflation, and the Federal Reserve's decision to keep interest rates unchanged.

The US dollar index fell more than 1% this week, making gold cheaper for buyers using other currencies and boosting demand. However, on Friday, the dollar index edged up around 0.2%, limiting gains in bullion.

The Fed's decision to keep interest rates steady at 3.50-3.75% was also supportive of gold prices, as it reduces policy uncertainty. Investors are now looking ahead to the next policy meeting on September 15-16, where there is a 63% probability of a rate hike.

Cooling inflation, with US inflation at 3.7% year-over-year in June, also supports gold prices. However, market participants will closely monitor developments surrounding the US-Iran conflict and key US economic data, including jobs reports, which could influence bullion's demand.