Gold set for monthly rise; eyes on US inflation data

Gold prices slipped 0.3% to $2,513.99 per ounce but are poised for a 3% monthly rise, driven by Fed rate cut expectations and geopolitical tensions.

Gold prices eased on Friday, but were on track for a second straight month of gains on rising bets of a Federal Reserve rate cut next month, while traders awaited key U.S. inflation data for additional guidance.

Spot gold was down 0.3% at $2,513.99 per ounce as of 0333 GMT, but on track to have increased about 3% this month.

U.S. gold futures fell 0.5% to $2,547.60.

The ”overall trend in gold remains bullish due to lower rates and geopolitical tensions,” said Peter Fung, head of dealing at Wing Fung Precious Metals.

”By year-end, prices should break $2,650 and in the medium to long term, expect it to go above $2,800 and maybe even $3,000.”

Currently, traders have fully priced in a U.S. rate cut next month, with a 66% chance of a 25-basis-point reduction and a 34% chance of a 50-bps cut, according to the CME FedWatch tool.

Those odds could be influenced by U.S. Personal Consumption Expenditures (PCE) data, due at 1230 GMT.

”The size of a potential September Fed cut could well be influenced by how tame or otherwise the core PCE Price Index is,” said Tim Waterer, chief market analyst, KCM Trade.

Data released on Thursday showed U.S. weekly jobless claims fell slightly last week but re-employment opportunities for laid-off workers are becoming more scarce.

On the geopolitical front, the Israeli military and Palestinian militant group Hamas have agreed to three separate, zoned three-day pauses in fighting in the Gaza Strip to allow for polio vaccinations, a senior WHO official said. Tensions have otherwise been high with fears of a widening conflict.

Spot silver slipped 0.2% to $29.38 per ounce, while palladium rose 0.29% to $940.40. Both metals are on track for monthly gains.

Platinum edged down by 0.1% to $978.50, set for a third straight month of losses.