Gold saw a drop on Friday, affected by U.S. inflation data that was lower than expected, reducing the metal’s appeal as a hedge against inflation, while a stronger dollar also added pressure. Spot gold declined by 0.3% to $4,319.07 per ounce as of 01:47, while U.S. gold futures slipped 0.4% to $4,346.70. Spot silver fell 1% to $64.79 per ounce after hitting a record high of $66.88 on Wednesday. Despite the pullback, silver remains up 125% year-to-date, outperforming gold’s 65% annual gain, while the dollar hovered near one-week highs, making dollar-priced bullion more expensive for holders of other currencies.

U.S. consumer prices rose at a slower-than-expected pace in the year to November, even as households continued to face affordability pressures from higher costs of essentials such as beef and electricity. Inflation rose 2.7% year-on-year in November, below the 3.1% increase expected by economists. Futures tied to the federal funds rate showed a slightly higher probability of a Federal Reserve rate cut at its January meeting following the data. On Tuesday, separate figures showed the U.S. unemployment rate climbing to 4.6%, above expectations of 4.4% and the highest level since September 2021.

Last week, the Federal Reserve delivered its third and final quarter-point interest rate cut of the year, a backdrop that typically supports non-yielding assets such as gold. Investors are now focused on the upcoming release of the Personal Consumption Expenditures price index, the Fed’s preferred inflation gauge, which could offer further clues on the future direction of monetary policy. The mixed macro signals have left precious metals caught between softer inflation expectations and a resilient dollar.

Adding to market attention, U.S. President Donald Trump said on Thursday that he had interviewed Fed Governor Christopher Waller as a potential successor to Jerome Powell, describing him as “great.” Waller previously stated that the Fed still has scope to cut rates and would safeguard the central bank’s independence if challenged. Elsewhere in the metals complex, platinum rose 0.5% to $1,924.59 after hitting a more than 17-year high on Thursday, while palladium slid 1.1% to $1,677.68 after nearing a three-year peak.