Gold climbs on softer US dollar and geopolitical concerns; poised for weekly decline

Gold prices increased on Friday, aided by a modest drop in the US dollar and rising geopolitical tensions, but remained on course for a weekly decrease as investors anticipated critical US data for more insight into the Federal Reserve's monetary policy stance.

The spot gold price gained 0.7% to $2,660.03 per ounce as of 0236 GMT. However, bullion is down 2% this week.

US gold futures rose 0.8% to $2,659.70.

The dollar index (.DXY) fell 0.2, increasing gold's appeal to holders of other currencies.

According to Brian Lan, managing director at Singapore-based dealer GoldSilver Central, growing geopolitical tensions are causing investors to flock to gold in the hopes of capitalizing on prospective price gains. "The modest weakening of the dollar has allowed gold prices to gain."

On Thursday, the Israeli military said its air force hit a location in southern Lebanon used by Hezbollah to store mid-range rockets, opening a new tab amid charges of mutual ceasefire violations.

Furthermore, on Thursday, Russia launched its second major attack on Ukraine's energy infrastructure this month, causing widespread power outages.

Bullion has always been regarded as a safe investment during economic and geopolitical uncertainty, such as conventional or trade conflicts.

Gold prices may test or fall below the important $2,600 mark, with the commodity expected to continue in a consolidation phase until December, Lan noted.