Gold prices rose on Monday as U.S. Treasury yields fell as investors awaited inflation data that will be released later in the week and could influence the Federal Reserve’s interest rate trajectory.
Spot gold was up 0.4% at $2,330.56 per ounce at 0834 GMT, after falling 1% on Friday as the dollar strengthened. U.S. gold futures rose 0.5% to $2,343.30.
Benchmark 10-year U.S. Treasury yields fell, making the unprofitable metal more attractive to investors.
“The focus remains on incoming US economic data and whether these data will confirm a soft landing, allowing the Fed to cut interest rates,” said Giovanni Staunovo, an analyst at UBS.
“We continue to see gold supported, targeting a price of $2,600 an ounce at the end of the year.”
Data on personal consumption expenditures (PCE), the Fed’s preferred measure of inflation, is due on Friday. Over the course of this week, at least five Fed officials will speak, including San Francisco Fed President Mary Daly, Fed Governors Lisa Cook and Michelle Bowman.
Traders are currently pricing in a 66% chance of a Fed rate cut in September, according to the CME FedWatch Tool.
Lower rates reduce the opportunity cost of holding bullion.
Data on Friday showed U.S. business activity hit a 26-month high in June, but pricing pressures eased significantly.
On the geopolitical front, eight Palestinians were killed Sunday in an Israeli airstrike on a training school near Gaza City used to distribute aid.
Among other precious metals, spot silver rose 0.5% to $29.68 an ounce and platinum gained 0.6% to $998.35.
Palladium gained 4.6% to $992.53. In the previous session, prices hit one-month highs and briefly surpassed the key $1,000 per troy ounce level amid volatile trading as some investors covered their short positions and the market was tight for the nearby physical offer.
