NEW YORK—Gold prices edged lower in light post-holiday trading Friday as the dollar showed some strength against other major currencies.

Despite the slight dip, analysts were quick to note that the metal continues to show underlying strength as investors harbor fears of rising inflation.

Gold prices have been trending upward after dropping in mid-November due to heavy selling by hedge funds and other large investors. Though still far from the $1,033.90 record high reached in March, gold managed to end the year up 5.4 percent.

Gold is often used as a hedge ag...

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