Gold gains on dollar retreat, focus now on US inflation data

Production at Krastsvetmet precious metals plant in Krasnoyarsk

By Brijesh Patel

(Reuters) - Gold prices rose on Monday, helped by a pullback in the dollar, while investors looked forward to U.S. inflation data due later this week that could influence the Federal Reserve's monetary policy path.

Spot gold was up 0.5%, to $2,332.62 per ounce, as of 02:02 a.m. ET (1802 GMT). U.S. gold futures settled 0.6% higher, to $2,344.40.

The dollar fell 0.3% against its rivals, making gold attractive for holders of other currencies. [US/]

Gold is in consolidation mode and there is active buying on dips, said David Meger, director of alternative investments and trading at High Ridge Futures, adding that investors are looking for the trajectory of interest rates moving forward and the timing of those potential rate cuts.

The focus this week will be on the U.S. Personal Consumption Expenditures (PCE) data, the Fed's preferred measure of inflation, due on Friday.

Also on the radar are at least five Fed officials, including San Francisco Fed President Mary Daly and Fed Governors Lisa Cook and Michelle Bowman, who are scheduled to speak this week.

Traders are currently pricing in a 66% chance of a Fed rate cut in September, according to the CME FedWatch Tool.

"We believe gold can hit $3,000/oz over the next 12-18 months, although flows do not justify that price level right now," BofA said in a research note.

"Achieving this would require non-commercial demand to pick up from current levels, which in turn needs a Fed rate cut to happen. An inflow into physically backed ETFs and a pick-up in LBMA clearing volumes would be an encouraging first signal."

Lower rates reduce the opportunity cost of holding bullion.

Elsewhere, spot silver was steady, at $29.49 per ounce, and platinum gained 0.5%, to $997.80.

Palladium climbed 3.2%, to $979.17. Prices hit a one-month high in the previous session, breaking above the key level of $1,000 per troy ounce in volatile trading as some investors covered their short positions and the market was tight for nearby physical supply.

(Reporting by Brijesh Patel and Anmol Choubey in Bengaluru; Editing by Vijay Kishore and Pooja Desai)