REUTERS

Gold ​drifted higher on Friday and headed for a weekly gain as optimism ‌over a potential end to the Iran conflict helped ease concerns about inflation and elevated interest rates.

Spot gold added 0.7 percent at $4,719.68 per ounce by 1745 GMT and has gained 2.3 percent this week.

US gold futures settled ​0.4 percent higher at $4,730.70.

Gold, typically seen as a haven during periods of global ​turmoil, faces pressure in a higher-interest-rate environment due to its non-yielding nature.

“Gold is trading like a risk asset rather than a safe haven. The rebound in ​gold is tied to the prospects of de-escalation in Iran. With energy prices coming ​down, we’re seeing the prospects for Fed rate cuts increase down the road,” said David Meger, director of metals trading at High Ridge Futures, referring to the US Federal Reserve.

The United States said it ​expected an Iranian response as soon as later on Friday to its latest proposal to ​end the war in the Gulf, even as US and Iranian forces traded fire in the ‌region.

Oil prices and the US dollar index were set for weekly declines. A weaker US currency makes dollar-priced gold less expensive for other currency holders, while softer energy prices ease concerns about inflation.

According to the CME FedWatch tool, the market sees a 14 percent chance of ​a US rate hike ​this year, down from around 22 percent the previous day.