Gold prices held steady on Monday after data showed a decline in U.S. inflation, boosting hopes that the Federal Reserve will begin cutting interest rates this year.
Spot gold rose 0.1% to $2,327.12 per ounce at 0202 GMT. Prices jumped more than 4% in the second quarter.
U.S. gold futures fell 0.1% to $2,336.60.
Data showed on Friday that the personal consumption expenditure index rose 2.6% after 2.7% in April. May’s inflation readings were in line with economists’ expectations.
“The latest US inflation data remains fresh in investors’ minds; the data was in line with consensus and, overall, had little impact on current market rate expectations for the Fed to begin easing in September,” said Yeap Jun Rong, market strategist at IG.
However, “any failure to defend the $2,280 level could pave the way for gold prices towards $2,200.”
Traders are pricing in a 63% chance of a first rate cut in September, according to the CME’s FedWatch tool. Lower interest rates reduce the opportunity cost of holding unprofitable bullion.
Market attention turns to remarks from Fed Chair Jerome Powell on Tuesday, followed by minutes from the Fed’s latest policy meeting on Wednesday and U.S. labor market data later in the week.
“Uncertainties around inflation, macroeconomic growth, the US election and geopolitics should continue to support demand for gold as a safe haven,” ANZ said in a quarterly note.
“Although central bank purchases have slowed in recent months, we believe emerging market central banks will continue to diversify their gold holdings.”
Spot silver was flat at $29.12 an ounce, platinum fell 0.2% to $990.90 and palladium rose 1.1% to $982.62.
Manufacturing activity in China, a consumer of key metals, fell for a second month in June, while services activity slowed, an official survey showed. (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Rashmi Aich)
