Gold inches lower; set for weekly gain on hopes of less aggressive Fed

Gold prices inched lower on Friday but were headed for a weekly gain as data pointed at signs of slowing inflation, lifting hopes that the U.S. Federal Reserve would scale back on aggressive rate hikes.

FUNDAMENTALS

* Spot gold was 0.1% down at $1,751.87 per ounce, as of 0048 GMT. It is up 4.2% for the week. U.S. gold futures rose 0.1% to $1,755.20.

* Bullion prices rallied nearly 3% on Thursday to a more than two-month high after the U.S. inflation data.

* U.S. consumer prices rose less than expected in October, pushing the annual increase below 8% for the first time in eight months, the strongest signs yet that inflation was slowing, which would allow the Fed to scale back its hefty interest rate hikes.

* Gold is considered an inflation hedge, but rising interest rates increase the opportunity cost of holding non-yielding bullion.

* The dollar index was down 2.4% for the week. A weaker dollar makes gold more appealing to overseas buyers.

* Mirroring sentiment, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.35% to 911.57 tonnes on Thursday.

* Spot silver was down 0.5% at $21.56. Platinum fell 0.4% to $1,028.51 and palladium slipped 0.2% to $1,960.49.

* China's usual year-end export surge is in doubt, as weak global demand dims a rare bright spot for the world's second-biggest economy, already hurt by COVID-19 lockdowns, a frozen property sector and ebbing domestic consumption.