Gold prices held largely steady on Friday, trading below record highs touched earlier this week, as strong U.S. labour market data dampened expectations of imminent Federal Reserve rate cuts, while easing geopolitical tensions around Iran reduced safe-haven demand.

Spot gold was last down 0.1% at $4,608.55 an ounce by 02:11 ET (07:11 GMT). U.S. Gold Futures edged down 0.2% to $4,611.10.

The yellow metal has retreated from a record high of $4,642.72/oz reached on Wednesday. Despite the modest pullback, bullion was still on track for a weekly gain of about 2%.

Traders assess Fed outlook after strong US data

Investor sentiment shifted after data showed U.S. initial jobless claims fell more than expected last week, underscoring the continued resilience of the labour market.

The stronger-than-anticipated reading reinforced views that the Federal Reserve may keep interest rates higher for longer, pushing market expectations for the timing of rate cuts this year.

Higher interest rates tend to reduce the appeal of non-yielding assets such as gold.

Following the data, the US Dollar Index climbed to a six-week high against a basket of major currencies, further weighing on gold prices by making the metal more expensive for overseas buyers.

Easing Iran tensions weighs on haven demand

Gold had surged earlier in the week as investors sought safety amid heightened geopolitical tensions linked to unrest in Iran.

Unrest in Iran was driven by widespread protests and government crackdowns, which had sparked fears of escalation and potential supply disruptions, lifting demand for precious metals

U.S. President Donald Trump tempered his previously hawkish rhetoric on possible military intervention, signalling a more cautious stance and noting reports that violent crackdowns on demonstrators may be easing. 

Metal markets slip

Other precious and industrial metals traded lower on Friday, weighed down by a stronger greenback.

Silver prices dropped 1.7% to $90.87 per ounce, while platinum futures declined 2.1% to $2,361.31/oz.

Benchmark Copper Futures on the London Metal Exchange slipped 1.7% to $12,907.20 a ton, while U.S. Copper Futures fell 1.8% to $5.88 a pound.