Gold prices extended declines on Friday and were on track for monthly and quarterly declines on expectations that the U.S. central bank may keep interest rates higher for longer.
Spot gold fell 0.8% to $1,850.44 per ounce by 1:53 p.m. EDT (1753 GMT), its lowest in more than six months. U.S. gold futures settled 0.7% lower at $1,866.10.
Bullion is set to end September down 4.6% and the quarter 3.6% lower, after the Federal Reserve struck a hawkish stance.
"Gold's outlook, fortunately or unfortunately, has a lot to do with the underlying interest rate environment moving forward," said David Meger, director of metals trading at High Ridge Futures.
Higher rates raise the opportunity cost of holding gold, which is priced in dollars and does not yield any interest.
The dollar index and benchmark 10-year Treasury yields were headed for quarterly rise.
Gold prices briefly rose as much as 0.8% after a milder inflation report. The core personal consumption expenditures (PCE) price index rose 3.9% on an annual basis in August, down from 4.3% in July. The headline index, however, gained by 3.5% on the year, up from 3.4% in July.
"Demand for gold as a hedge against a soft-landing failure is unlikely to go away as the outlook for the U.S. economic outlook in the months ahead looks increasingly challenged," Ole Hansen, head of commodity strategy at Saxo Bank, wrote in a note.
On the physical front, gold premiums eased slightly in top consumer China this week, but remained elevated on high investor demand amid a broadly weaker yuan and economic worries.
Spot silver fell 1.7% to $22.20 per ounce and was down 2.4% for the quarter.
Platinum fell 0.3% to $902.14, while palladium edged down 2.1% at $1,245.48.