Gold drops, but set for a third quarterly gain

by Jonathan Adams

Spot gold was down 0.2% at $2,323.53 per ounce, while U.S. gold futures dropped 0.1% to $2,334.50

Gold prices dropped on Friday, but were set for a third consecutive quarterly rise, while investors looked forward to U.S. inflation data due later in the day for more clarity on the Fed’s interest rate-cut timeline.

Spot gold was down 0.2% at $2,323.53 per ounce, as of 0536 GMT. Prices have advanced nearly 4% for the quarter.

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

Gold is up on the quarter, largely as the scope for monetary easing in the U.S. has increased. China also purchased large amounts of gold for their reserves, which helped offer support in the second quarter, according to Ilya Spivak, head of global macro at Tastylive.

After adding to its gold reserves for 18 successive months, official data from the 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 increased more than 1% in the earlier session after data showed a continued, though moderate, slowdown in U.S. economic activity. Currently, the market sees a 64% probability of a first Fed cut in September, shows the CME FedWatch tool.

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

The U.S. PCE price index – the Fed’s preferred inflation measure – is due at 1230 GMT.

A soft set of personal consumption expenditures’ figures is needed to keep hopes of Fed easing alive and further support gold, said City Index senior analyst Matt Simpson.

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

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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