By Ambar Warrick 

-- Gold prices retreated on Friday, as hawkish comments on interest rate hikes by the Federal Reserve outweighed optimism over signs of cooling U.S. inflation. 

As of 22:17 ET (02:17 GMT), spot gold was down 0.1% at $1,788.13 an ounce, while gold futures held around $1,803.50. Still, both instruments were set for mild gains this week, marked by a sharp fall in the dollar.

But overnight comments from Fed officials on the path of policy tightening kept investors uncertain over future interest rates. 

San Francisco Fed President Mary Daly said she was open to a 75 basis point rate hike in September, noting that inflation still remained around 40-year highs, Reuters reported. Chicago Fed President Charles Evans also said this week that the Fed would need to raise rates to at least 3.25% to 3.5% by the year-end, to combat inflation. 

U.S. benchmark rates are currently between 2.25% to 2.5%. 

Their comments offset optimism over an unexpected fall in U.S. producer price inflation in July, data showed on Thursday. This came after a reading on Wednesday showed U.S. consumer price inflation remained static through July, after rising exponentially earlier in the year. 

While both readings caused a pullback in the dollar index, investors remained uncertain over the path of U.S. monetary policy this year, given that there is more inflation and employment data due before the Fed’s next meeting. Treasury yields also rose this week. 

Prices of other precious metals reflected this trend. Platinum futures fell 0.6%, while silver retreated 0.4%. 

Among industrial metals, copper futures fell 0.3%, as concerns over slowing manufacturing activity across the globe continued to weigh on the red metal. 

While copper is set for a mild weekly gain on weakness in the dollar, it still faces risks from a slowdown in major importer China.

Rising COVID cases in some parts of the mainland are likely to trigger more losses in copper prices.