Gold futures posted one of their strongest single-session gains of the summer on Thursday, surging 3.13% as the U.S. Dollar Index fell 0.85% following a data-heavy morning that painted a picture of stagflation for the American economy.

Gold futures posted a moderate gain on Wednesday, with the most active August contract advancing $36.70, or 0.91%, to settle at $4,065.50 — a result that belied an exceptionally turbulent session shaped by geopolitical developments in the Middle East and the Federal Reserve's latest policy decision.

Since the start of March gold has been reacting to increasing inflationary pressures caused by the rise in crude oil prices. The elevated oil prices have caused traders to anticipate at least one interest rate hike by September flipping expectations that had been expecting rate cuts this year. 

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Gold held steady on Friday as traders await next week's FOMC meeting for gold's next move. Although the chance of a rate hike at the July FOMC meeting has been reported to be very low that is not completely accurate according to the CME's FedWatch tool. Based on the beliefs of polled interest rate futures traders there is more than a slight chance of a rate hike next week.

Gold extended its retreat from this week's highs on Thursday, sliding roughly 1.5% as a firmer dollar, rising Treasury yields, and an unexpectedly resilient reading on the U.S. labor market combined to pull the metal lower.

Gold staged a dramatic rally on Tuesday, pushing prices in the futures market to fresh two-week highs above $4,170. The advance of $75.50, or 1.85%, was notable, but the bigger story wasn't the size of the move — it was what drove it, marking an apparent reversal from the pattern that has governed gold trading in recent months.

Gold gained $72.30, or 1.80%, on Tuesday based on the most active August futures contract, marking the largest gain for the precious metal since July 2. Gold moved higher on hopes that a Middle East ceasefire may be forthcoming.

Gold is trading lower at the start of the week, even though prices are running a few dollars above today's opening level. Gold futures are currently showing a decline of $11.20, or 0.28%, with prices at the time of writing at $4,011.80 — roughly $6 above Monday's opening price of $4,005.60.

Gold rose on Friday, but will close with a weekly loss, as escalating U.S.–Iran tensions drove energy prices higher — fueling inflation fears and reinforcing expectations that U.S. interest rates will move higher still.

U.S. gold futures for August delivery settled up 1.08% at $4,023 on the day, but down $105 on the week.