Gold rebounds as dollar eases amid slowing US inflation

Gold rose on Friday after a sharp fall one day earlier, helped by a slight retreat in the dollar as signs of cooling U.S. inflation raised bets that the Federal Reserve will likely end its monetary tightening cycle.

Spot gold GOLD was up 0.75% at $1,959.53 per ounce by 2:15 p.m. ET (1815 GMT). U.S. gold futures GOLD settled 0.8% higher at $1,960.40.

U.S. annual inflation slowed considerably in June, data released on Friday showed. Inflation as measured by the personal consumption expenditures (PCE) price index increased 0.2% last month, according to the Commerce Department.

Rising interest rates makes holding gold less appealing to investors since bullion yields no interest.

"The core PCE, which is what the Fed really looks at, came in line with estimates. It really wasn't much of a surprise. Also, the dollar is weaker today and is giving a bit of a boost for gold," said Edward Meir, a metals analyst who provides research for Marex.

"I think the Fed does not really mind seeing the stronger data as long as the inflation numbers continue to come down. The Fed is probably done raising rates and I would in general be inclined to buy the dips on gold," Meir added.

Gold slipped nearly 1.4% on Thursday to register its worst day in nearly a month after data showed the U.S. economy grew faster than expected in the second quarter and weekly jobless claims fell, boosting the dollar.

However, on Friday the dollar DXY slipped 0.16% against its rivals, making gold less expensive for other currency holders.

Both the U.S. central bank and the European Central Bank raised interest rates this week and kept the door open to further tightening.

Spot silver XAGUSD1! also gained 0.83% to $24.33 per ounce, while platinum PL1! fell 0.23% to $933.81 and palladium XPDUSD1! was near flat at $1,241.41.