Gold prices fell in trading on Friday and are headed for their worst weekly performance in over a month, after the Federal Reserve eased its expectations for interest rate cuts amid a temporary easing of concerns about an imminent U.S. attack on Iran.
Spot gold fell by 0.6 percent to $3,350 an ounce as of 08:51 GMT, marking a decline of 2.4 percent for the week so far, while U.S. gold futures dropped by 1.2 percent to $3,366.
The dollar has risen by 0.5 percent so far this week, heading for its largest weekly gain in over a month, increasing the cost of gold for holders of other currencies.
The White House announced on Thursday that President Donald Trump will decide within the next two weeks whether the United States will intervene in the air war between Israel and Iran. The air war between Israel and Iran entered its second week on Friday.
Nitish Shah, a commodities strategist at WisdomTree, said that the two-week deadline set by Trump suggests that things may see some easing before the U.S. intervenes in that military strike. 'I think this alleviates some concern in the markets, allowing gold prices to drop a little.'
Gold is considered a safe haven in times of political and economic uncertainty and tends to thrive in a low-interest-rate environment.
The Federal Reserve kept interest rates at their current range of 4.25-4.50 percent but slowed its overall expectations for interest rate cuts in response to tougher economic forecasts.
Trump renewed his calls on Thursday for the Federal Reserve to lower interest rates, stating that prices should be 2.5 percent lower.
Ole Hansen, head of commodity strategy at Saxo Bank, said: 'Gold, silver, and platinum have faced setbacks as traders took profits after the Federal Open Market Committee meeting last Wednesday.'
Gold is likely to continue its current consolidation phase, with support around $3,320, followed by $3,245.
In other markets, spot silver fell by 1 percent to $36.01 an ounce, while palladium rose by 0.1 percent to $1,051, and platinum declined by 1.4 percent to $1,289, after hitting its highest level in over ten years in the previous session.