Spot gold declined 0.3% to $2,514.55 an ounce, while gold futures expiring in December dropped 0.5% to $2,547.80 an ounce

Gold prices dropped slightly in Asian trade on Friday, but stayed near record highs as markets awaited more cues on interest rates from key U.S. inflation data due later in the day.

But bullion prices were set for strong gains in August, as a mix of safe haven demand and expectations of interest rate reductions put the yellow metal at record highs.

Spot gold declined 0.3% to $2,514.55 an ounce, while gold futures expiring in December dropped 0.5% to $2,547.80 an ounce by 05:08 GMT.

Spot prices were set to gain nearly 2.8% in August, after reaching a record peak of $2,531.72 an ounce earlier in the month.

Tensions in the Middle East spurred safe haven demand for gold, as did a rout in risk-driven markets at the beginning of the month. Signs of steady central bank buying, in emerging markets, also supported prices.

But gold’s biggest point of support was expectations of lower U.S. interest rates, which present a more accommodative environment for investing in the yellow metal.

Personal Consumption Expenditure (PCE) price index data- the Fed’s preferred inflation gauge- is due later on Friday and is set to offer more cues on interest rates.

The PCE data is expected to show inflation remained sticky in July which, along with recent signs of resilience in the U.S. economy, could give the Federal Reserve less impetus to reduce interest rates sharply. The dollar firmed on this notion and was headed for a weekly gain.

But traders are still pricing in an at least 25bp cut in September, according to CME Fedwatch.

Among other precious metals, platinum and silver were mixed on Friday, but were vastly lagging gold through August.