Market Analysis

Gold prices eased on Friday but were on track for a third consecutive quarterly increase as investors awaited U.S. inflation data due later in the day for insights on the Federal Reserve's potential interest rate cuts.

Spot gold decreased by 0.2% to $2,323.53 per ounce at 0536 GMT. Prices have risen approximately 4% over the quarter.

U.S. gold futures dropped 0.1% to $2,334.50.

"Gold has performed well this quarter, primarily due to the increasing likelihood of monetary easing in the U.S. Additionally, China's significant gold purchases for their reserves provided support in the second quarter," stated Ilya Spivak, head of global macro at Tastylive.

Despite 18 consecutive months of increasing gold reserves, the People's Bank of China (PBOC) reported no change in its holdings for May. However, a World Gold Council survey indicated that more central banks might boost their gold reserves within the next year.

Gold rose over 1% in the previous session after data indicated a moderate slowdown in U.S. economic activity. The market currently estimates a 64% probability of the Federal Reserve implementing its first rate cut in September, according to the CME FedWatch tool.

Nonetheless, Fed Governor Michelle Bowman emphasized on Thursday that she is not yet ready to support a rate cut due to persistent inflation pressures.

The U.S. personal consumption expenditures (PCE) price index, the Federal Reserve's preferred inflation measure, is expected at 1230 GMT.

City Index senior analyst Matt Simpson noted that a softer set of PCE figures would be necessary to maintain hopes of Fed easing and further bolster gold.

While bullion is seen as a hedge against inflation, higher interest rates increase the opportunity cost of holding the non-yielding asset.

Spot silver edged up 0.1% to $29.09, and platinum increased by 0.8% to $995.13, with both metals poised for quarterly gains.

Spot palladium surged 1.6% to $944.63.

Paraphrasing text from "Reuters" all rights reserved by the original author.