Gold prices fell on Friday but headed for a third consecutive quarterly rise as investors await US inflation data due later in the day for more clarity on the timing of the rate cut. interest rates from the Federal Reserve.
Spot gold was down 0.3% at $2,321.18 per ounce, as of 0354 GMT. Prices have gained about 4% in the quarter.
U.S. gold futures fell 0.2% to $2,331.90.
“Gold is higher in the quarter, largely as the scale of monetary easing in the US has increased… China also purchased large amounts 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 holdings for 18 consecutive months, official data from the People’s Bank of China (PBOC) showed its holdings remained unchanged in May. A survey by the World Gold Council, however, found that other central banks could increase gold reserves within 12 months.
Gold rose more than 1% in the previous session after data showed a continued, albeit moderate, slowdown in U.S. economic activity. Currently, the market sees a 64% chance of a first Fed cut in September, according to the CME’s FedWatch tool.
However, Fed Governor Michelle Bowman reiterated Thursday that she is not yet ready to support a central bank rate cut with inflation pressures still high.
The U.S. Personal Consumption Expenditures (PCE) price index — the Federal Reserve’s preferred measure of inflation — is due at 1230 GMT.
A run of soft (PCE) data is needed to keep hopes of Fed easing alive and further support gold, said Matt Simpson, senior analyst at City Index.
While gold is considered a hedge against inflation, higher rates increase the opportunity cost of holding the unprofitable asset.
Spot silver remained flat at $29.07, while platinum gained 1.1% to $998.15. Both metals posted quarterly gains.
Spot palladium rose 1.6% to $944.40.
