Data released during the week showed that US producer prices rose more than anticipated in May, resulting in the strongest annual increase in three-and-a-half years. Higher energy costs linked to the conflict in the Middle East contributed significantly to the rise.

According to CME Group’s FedWatch Tool, traders are currently assigning a 60% probability to a US interest rate hike by December.

Although gold is widely regarded as a hedge against inflation, higher interest rates generally reduce the appeal of the non-yield-bearing asset.