Gold prices edged higher in Asian trading on Friday as investors weighed reports that the U.S. and Iran were close to extending their ceasefire agreement, while persistent inflation concerns due to higher oil prices kept bullion under pressure.

Spot gold rose 0.4% to $4,514.27 an ounce by 02:40 ET (06:40 GMT). U.S. Gold Futures edged up 0.3% to $4,543.75 an ounce.

Gold fell to a two-month low in the previous session, but erased losses to settle 0.8% higher after reports suggested the US and Iran would resume negotiations.

Bullion was set to end the week largely flat after volatile trading driven by shifting headlines surrounding the Middle East conflict.

Market sentiment improved after reports said Washington and Tehran had reached a tentative agreement to extend a 60-day ceasefire and allow shipping through the Strait of Hormuz, although the proposal still awaits approval from U.S. President Donald Trump and confirmation from Iran.

Typically, geopolitical tensions and military conflicts boost demand for safe-haven assets such as gold. But in the current environment, investors are increasingly worried that higher oil and energy costs linked to the Middle East crisis could fuel broader inflation pressures, forcing the Federal Reserve to maintain restrictive monetary policy.

“Markets remain cautious over whether diplomatic progress will hold, while concerns over higher energy prices continue to fuel inflation risks. This could reinforce expectations that interest rates stay higher for longer – a negative for non-yielding assets like gold,” ING analysts said in a note.

In this articleXAU/USD+0.52%XAG/USD-0.51%GC+0.38%HG-0.38%LCO-1.04%CL-0.91%US10YT=X+0.04%XPT/USD-0.61%

Data released on Thursday showed the U.S. personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, rose 3.8% year-on-year in April, the fastest pace in roughly three years.

The hotter inflation data reinforced expectations that the Fed will keep borrowing costs elevated well into next year.

Treasury yields eased slightly after the data, but remained near multi-month highs, limiting upside momentum for bullion.

Among other precious metals, silver prices edged down 0.2% to $75.52/oz, while platinum also fell 0.2% to $1,920.3/oz.

Benchmark Copper Futures on the London Metal Exchange eased 0.5% to $13,661.33 a ton, while U.S.Copper Futures fell 0.4% to $6.40 a pound.