Gold prices steadied on Friday and were headed for a third straight quarterly gain after a key U.S. inflation report came in broadly in line with expectations, boosting hopes the Federal Reserve will cut interest rates by September.
Spot gold was steady at $2,328.85 an ounce, as of 1335 GMT. Prices gained more than 4% for the quarter.
U.S. gold futures rose 0.1% to $2,339.60.
“We continue to see the trend of inflation slowly declining. As a result, we’ve seen yields continue to decline, bonds continue to rise, which is somewhat supportive of the gold market,” said David Meger, director of alternative investments and trading at High Ridge Futures.
Gold has also been supported by a decline in U.S. Treasury yields, making non-yielding bullion more attractive to investors.
The market bet Friday that the Federal Reserve would cut interest rates by September and do so again in December after a government report showed that inflation as measured by the Consumer Spending Index personal income (PCE) had not increased from April to May.
Last month’s PCE index followed an unrevised 0.3% gain in April, as consumer spending increased moderately.
According to CME FedWatch, traders currently give a 68% chance of a rate cut in September, up from 64% before the inflation data was released.
Mary Daly, president of the Federal Reserve Bank of San Francisco and a member of the Federal Open Market Committee for 2024, said the latest data showing that inflation did not increase from April to May was “a good news showing that the policy is working.
Elsewhere, spot silver rose 1.1% to $29.38 and platinum gained 2.5% to $1,012.03. Both metals were on track for quarterly gains.
Spot palladium rose 4.5% to $970.88, but was heading for a third straight quarterly decline.
