Gold Set to Achieve Third Quarterly Gain, Focus on US Inflation Data

Gold prices dipped on Friday, but were on track for a third consecutive quarterly increase, while investors awaited US inflation data later in the day for more insight into the Federal Reserve's interest rate-cut timeline.

At 0741 GMT, spot gold was down 0.1% at $2,326.27 per ounce. Prices have risen over 4% for the quarter, according to Reuters.

US gold futures remained unchanged at $2,336.90.

Ilya Spivak, head of global macro at Tastylive, stated, "Gold has risen for the quarter, largely due to the potential for monetary easing in the US... China's significant gold purchases for their reserves also provided support in the second quarter."

Official data from the People's Bank of China (PBOC) showed that after 18 consecutive months of increasing its gold reserves, holdings remained flat in May. However, a survey by the World Gold Council indicated that more central banks may boost their gold reserves within the next 12 months.

Gold surged over 1% in the previous session following data showing a continued, albeit moderate, slowdown in US economic activity. The market currently anticipates a 64% likelihood of the first Fed rate cut in September, as per the CME FedWatch tool.

Nevertheless, Fed Governor Michelle Bowman reiterated on Thursday that she is not yet ready to support a rate cut with inflation pressures still elevated.

The US personal consumption expenditures (PCE) price index - the Fed's preferred inflation measure - is scheduled for release at 1230 GMT.

City Index senior analyst Matt Simpson mentioned that a weak set of PCE figures is necessary to sustain hopes of Fed easing and further bolster gold.

Although bullion is considered an inflation hedge, higher rates raise the opportunity cost of holding the non-yielding asset.

Spot silver climbed 0.3% to $29.15 and platinum increased by 1.2% to $999.20. Both metals were poised for quarterly gains.

Spot palladium rose by 2.6% to $953.07.