Honesty is a great virtue. In fact, we declare as members of the Church, in the 13th Article of Faith, that "we believe in being honest." Also, the Young Women have chosen integrity as one of the seven values that should be uppermost in the minds of girls in the Church.
The scriptures are also full of advice on the evils of lying. In Proverbs 12:22 it says, "Lying lips are abomination to the Lord: but they that deal truly are his delight." In other words, the Lord has told us that we should always be truthful.
The world also appreciates an honest person. Employers place a great deal of trust in their employees and appreciate those who live up to that trust. Friends also enjoy being with someone who is always truthful and kind.
That's the dilemma here. How do you be both honest and kind at the same time? Sometimes people excuse cruelty by saying, "But it's the truth." Gossip may be accurate, but passing along details of events that were being corrected or repented of in private when you are not personally affected, is both unkind and unnecessary. The best solution is to be honest in all your dealings, but when someone confides something in you, treat those confidences with as much care yo would if your friends gave you their money to take care of. You would be careful to make sure their money was in a safe place where people who had no business with it couldn't get it. Treat what they tell you with the same care.
Words can cause a lot of hurt feelings. And the hurt they cause can be difficult or maybe even impossible to apologize for. Some things really are better left unsaid. It is not helpful to pass on every comment you hear mare about someone you know. For example, one of your friends may not like another person the first time they meet. But it is not very helpful to inform both sides of everything the other is saying as they are coming to know each other. They could change their initial impressions and becomes friends.
Sometimes the truth, even if it is hurtful, needs to be said so changes can take place. When your friends need to know some things in order to change their lives for the better, approach them with sensitivity and consideration. Keep the Golden Rule uppermost in your mind. What would you want your friends to do if the situation were reversed?
The Prophet Joseph Smith wrote in the 13th Article of Faith that we believe in being honest. But in addition to honesty, we also believe in treating each other with consideration. The truth can be tempered with kindness.