Aug 14 (Reuters) - Gold prices steadied on Friday after pulling back from a more than two-month high, as investors booked profits following a rally fuelled by softer U.S. inflation data and fading expectations for a Federal Reserve rate hike in September.
Spot gold was little changed at $4,351.45 an ounce by 1113 GMT after the contract fell 1.3% in the previous session. U.S. gold futures for December delivery fell 0.3% to $4,407.70 per ounce.
Bullion rallied to its highest point since June 5 on Thursday.
"Gold is barely holding onto a weekly advance, as markets indulge in some profit-taking following bullion's mid-week spike to a two-month high," said Han Tan, chief market analyst at Bybit.
"The coming week's Federal Open Market Committee meeting minutes may yet trigger fresh volatility for spot gold, even as traders keep a watchful eye on global oil benchmarks."
U.S. producer prices were unchanged in July, following a revised 0.1% drop in June, while U.S. consumer prices barely increased last month as the cost of gasoline declined for a second consecutive month.
Traders are now pricing only a 31% chance of a rate hike in September, down from about 44% a week earlier, according to the CME FedWatch Tool. FEDWATCH
Lower interest rates boost gold as it does not yield interest.
Physical gold discounts in India widened this week to their highest levels in more than two months as rallying prices curbed consumption, while interest in China remained muted.
Meanwhile, oil prices climbed after Washington threatened an open-ended naval blockade on Iran, reviving supply concerns.
In other metals, spot silver rose 0.3% to $64.66 per ounce. Platinum was up 0.4% to $1,724.90 per ounce and palladium gained 0.2% to $1,309.28 per ounce, both metals were headed for a weekly drop.
Reporting by Dharna Bafna and Swati Verma in Bengaluru; Editing by Devika Syamnath and Joyjeet Das
