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Gold edged higher on Friday as investors assessed reports of a U.S.-Iran ceasefire deal amid growing concerns around inflation and U.S. interest rate hikes.

Spot gold rose 0.2% to $4,499.56 per ounce by 0231 GMT, but was down about 0.2% for the week so far. U.S. gold futures inched 0.1% lower to $4,529.80.

Bullion fell to a two-month low on Thursday before closing higher on reports of a U.S.-Iran ceasefire extension.

"Yesterday, we saw gold went down to $4,360 and was likely to go down further until the (ceasefire) announcement came, due to which we suddenly saw the reversal of prices. This is where the market continues to be this morning," said GoldSilver Central Managing Director Brian Lan.

"Markets are now waiting for the deal to be signed even if it's only just pending Trump's signature."

The United States and Iran reached an agreement on Thursday to extend their ceasefire and lift restrictions on shipping through the Strait of Hormuz, sources told Reuters, though U.S. President Donald Trump has yet to approve it and Iranian state media said it had not been finalised.

U.S. inflation increased at its fastest pace in three years in April, driven by higher energy prices due to the Iran war and cementing economists' views that the Federal Reserve would hold interest rates unchanged well into next year.

Federal Reserve Bank of New York President John Williams said central bank monetary policy is in the right place given the outlook, adding he expects inflation to be high in the near term with the pressures easing later in the year.

Spot silver rose 0.1% to $75.67 per ounce and palladium gained 0.4% to $1,373.14, with both metals headed for a weekly gain. Platinum lost 0.4% to $1,915.53 and was on course for a weekly loss.