Gold Set to Record Monthly Decline Amid Await of US Inflation Data

US gold futures rose 0.5% to $4201.90.

The dollar is set to gain for the month, making metals priced in the US currency more expensive for holders of other currencies.

The US Personal Consumption Expenditures Price Index is due at 12:30 GMT.

Tony Lyons, CEO of Critical Metals, said, "The release of the Personal Consumption Expenditures Price Index data will be an important test for gold, as it may affect US monetary policy expectations and the direction of Treasury yields and the dollar."

He added, "A weak reading is likely to support gold and open the way for its return to the $4200-4300 range, while a strong reading may push yields and the dollar higher, putting new pressure on gold and testing the $4100 level."

Higher interest rates typically reduce the appeal of gold as it does not generate a yield.

According to CME's FedWatch tool, traders see a 47% chance of the Federal Reserve raising rates in October and a 91% chance of a hike in December. The US central bank raised rates by 25 basis points this month.

Meanwhile, John Williams, President of the Federal Reserve Bank of New York, said policymakers may only need to raise rates once this year to bring inflation back on track to the central bank's 2% target.

On the geopolitical front, Qatar expressed hope that its diplomatic mediation efforts between Iran and the United States would lead to a breakthrough, even after US President Donald Trump denied reports that he was ready to ease sanctions on Tehran and release frozen funds in exchange for concessions on its nuclear program.

As for other precious metals, silver fell 0.8% to $60.98 in spot trading, platinum remained stable at $1705.10, and palladium dropped 0.3% to $1219.60. The three metals are set to record monthly declines.