Gold prices eased on Friday but were set for a third straight quarterly rise as investors awaited U.S. inflation data due later in the day for a clearer timetable for Federal Reserve interest rate cuts.
Spot gold was down 0.3% at $2,321.18 an ounce by 0354 GMT. Prices have gained about 4% in the quarter.
US gold futures fell 0.2% to $2,331.90.
“Gold has risen in the quarter, largely because the scope for monetary easing in the US has increased… China also bought large quantities of gold for its reserves, which helped provide support in the second quarter” said Ilya Spivak, head of global macro at Tastylive.
After increasing its gold reserves for 18 consecutive months, official data from the People’s Bank of China (PBOC) showed that its holdings remained stable in May. However, a survey by the World Gold Council revealed that more central banks are likely to increase their gold reserves within 12 months.
Gold rose more than 1% in the previous session after data showed a continued, albeit moderate, slowdown in US economic activity. The market currently sees a 64% chance of a first Fed cut in September, according to CME’s FedWatch tool.
However, Fed Governor Michelle Bowman reiterated on Thursday that she is not yet prepared to support a central bank rate cut as inflationary pressures remain high.
The U.S. personal consumption expenditures (PCE) price index – the Federal Reserve’s preferred measure of inflation – is due out at 1230 GMT.
A soft set of PCE figures is required to keep Fed easing hopes alive and further support gold, said City Index senior analyst Matt Simpson.
Although bullion is considered a hedge against inflation, higher rates increase the opportunity cost of holding the non-yielding asset.
Spot silver was flat at $29.07, platinum rose 1.1% to $998.15. Both metals posted quarterly gains.
Spot palladium rose 1.6% to $944.40.
