Gold on track for third quarterly gain

Bengaluru — Gold prices eased on Friday, but were set for a third consecutive quarterly rise, while investors look forward to US inflation data due later in the day for more clarity on the Federal Reserve’s interest rate cut timeline.

Spot gold was down 0.3% at $2,321.18/oz by 3.54am GMT. Prices have gained about 4% for the quarter.

US gold futures fell 0.2% to $2,331.90.

“Gold is up on the quarter, largely as the scope for monetary easing in the US has increased.... China also bought large amounts of gold for their reserves, which helped offer support in the second quarter,” said Ilya Spivak, head of global macro at Tastylive.

After adding to its gold reserves for 18 consecutive months, official data from the People's Bank of China (PBOC) showed its holdings were flat in May. A survey by the World Gold Council, however, found that more central banks may increase gold reserves within 12 months.

Gold rose more than 1% in the previous session after data showed a steady, though moderate, slowdown in US economic activity. The market sees a 64% chance of a first Fed cut in September, according to the CME FedWatch tool.

However, Fed governor Michelle Bowman reiterated on Thursday that she was not ready yet to support a central bank rate cut with inflation pressures still elevated.

The US personal consumption expenditures (PCE) price index — the Federal Reserve’s preferred inflation measure — is due at 12.30pm GMT.

A soft set of PCE figures was required to keep the hope of Fed easing alive and further support gold, City Index senior analyst Matt Simpson said.

While bullion is considered an inflation hedge, higher rates increase the opportunity cost of holding the non-yielding asset.

Spot silver was flat at $29.07, platinum gained 1.1% to $998.15. Both metals were set for quarterly gains. Spot palladium climbed 1.6% to $944.40.

Reuters