Gold prices rose on Friday, helped by a retreating dollar and Treasury yields as data showed core price inflation slowed in August, but bullion was still on track for monthly and quarterly declines on prospects of higher U.S. interest rates.
Spot gold rose 0.6% to $1,876.45 per ounce by 9:26 a.m. EDT (1326 GMT). U.S. gold futures gained 0.8% to $1,893.50.
The core personal consumption expenditures (PCE) price index rose 3.9% on an annual basis in August, down from 4.3% in July. The headline index, however, gained by 3.5% on the year, up from 3.4% in July.
"We have seen lows in gold for the short term. After weaker PCE, a move back over $1,885 will be a salve for scalded bulls," said Tai Wong, a New York-based independent metals trader.
"Last weeks 'higher-for-longer' Fed dot plot has done its damage but gold has been remarkably resilient behind central bank buying."
Bullion hit its lowest in six months on Thursday, and is set to end September down 3.3% and the quarter 2.3% lower, after the Federal Reserve struck a hawkish stance.
Higher rates raise the opportunity cost of holding gold, which is priced in dollars and does not yield any interest.
The dollar was down 0.4% and benchmark 10-year Treasury yields retreated from a 16-year peak, lifting bullion's appeal, but both were still headed for quarterly rise.
Data on Thursday showed the U.S. economy maintained a fairly solid pace of growth in the second quarter.
On the physical front, gold premiums eased slightly in top consumer China this week, but remained elevated on high investor demand amid a broadly weaker yuan and economic worries.
Spot silver gained 3.4% to $23.36 per ounce, platinum firmed 1.5% to $918.01 and palladium edged up 0.2% to $1,269.18. All three were poised to squeeze out quarterly gains if the trend holds.
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