Gold prices steadied on Friday and were headed for a third straight quarterly gain after a key U.S. inflation report came broadly in line with expectations, boosting hopes that the Federal Reserve may cut interest rates by September.
Spot gold was steady at $2,328.85 per ounce, as of 1335 GMT. Prices have gained over 4% for the quarter.
U.S. gold futures rose 0.1% to $2,339.60.
“We are continuing on trend in a very incremental slow pullback of inflation. As a result, we’ve seen yields continue to creep lower, bonds creep higher and that is somewhat supportive for the gold market,” said David Meger, director of alternative investments and trading at High Ridge Futures.
Gold was also supported by a decline in the U.S. Treasury yields which makes the non-yielding bullion more attractive for investors.
Market bets rose on Friday that the Federal Reserve will cut interest rates by September and do so again in December after a government report showed inflation by the personal consumption expenditures index (PCE) did not rise at all from April to May.
PCE last month followed an unrevised 0.3% gain in April data, while consumer spending rose moderately.
Traders are currently pricing in about a 68% chance of a rate cut in September, compared with 64% before the release of the inflation data, according to CME FedWatch tool.
San Francisco Federal Reserve Bank President Mary Daly – also a member of the 2024 Federal Open Market Committee – said the latest data showing inflation did not rise at all from April to May is “good news that policy is working”.
Elsewhere, spot silver rose 1.1% to $29.38 and platinum gained 2.5% to $1,012.03. Both metals were set for quarterly gains.
Spot palladium rose 4.5% to $970.88, but was headed for a third straight quarterly drop.
