Gold prices rose modestly Friday as investors weighed reports of a potential U.S.-Iran agreement that could ease global energy costs and inflation pressures.

Spot gold gained 0.2 per cent to US$4,220.27 an ounce, while gold futures advanced 3.1 per cent to US$4,241.51. Despite the uptick, gold remained on track for a weekly loss of more than two per cent.

Reports suggest a possible deal could lead to the reopening of the Strait of Hormuz and the easing of U.S. sanctions on Iranian oil exports, boosting global crude supplies.

Brent crude fell 4.3 per cent to US$86.47 a barrel, as expectations of increased oil output reduced inflation concerns and the likelihood of further interest-rate hikes.

Lower interest rates generally support demand for gold, a non-yielding asset.