Gold prices dropped nearly 2% Friday and were poised to break a nine-week winning streak as investors booked profits and signs of easing trade tensions between the U.S. and China tempered safe-haven demand ahead of a key U.S. inflation report.

Spot gold was down 1.9% at $4,047.30 per ounce at 1105 GMT, marking a 4.8% decline so far this week, its largest weekly percentage drop since November 2024. U.S. gold futures for December delivery fell 2% to $4,061.30 per ounce.

Bullion has gained 55% this year, driven by geopolitical turmoil, central bank buying and expectations of U.S. interest rate cuts. Spot prices hit a record high of $4,181.21 on Monday, after climbing past the $4,000/oz mark for the first time this month.

"The rally of the last few weeks has been too quick, and investors are betting that the trade tension between the U.S. and China can slow down," said Carlo Alberto De Casa, external analyst at banking group Swissquote.

"Investors that have achieved massive gains are taking profit or at least reducing their exposure on gold."

The White House confirmed on Thursday that U.S. President Donald Trump will meet Chinese President Xi Jinping next week during his Asia trip, easing doubts about the meeting amid heightened trade tensions.

Traders are also awaiting the latest U.S. consumer price index report, due at 1230 GMT, which is expected to show solid consumer price growth for September.

Markets still anticipate the Federal Reserve will cut interest rates by 25 basis points at its meeting next week.

Gold typically benefits from lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.

"Even if short-term corrections emerge, the broader trend (for gold) remains firmly upward, underpinned by strong fundamentals," said Russell Shor, senior market analyst at Tradu.

The dollar index was up 0.6% for the week, making gold more expensive for other currency holders.

Elsewhere, spot silver fell 2.2% to $47.83 per ounce and was on track for its worst week since March, down 7.4% so far. Platinum slipped 2.6% to $1,581.30 on Friday and palladium lost 4.1% to $1,397.50.