Central banks continue to report gold purchases analyst
Focus on U.S. PCE data due on Friday
Traders price in 70 chance of Fed rate cut in JuneCME FedWatch

March 27 Reuters Gold prices edged higher on Thursday as investors awaited U.S. inflation data that could offer fresh clues about when the Federal Reserve will start easing its monetary policy.

Spot gold was up 0.5 at 2,190.87 per ounce as of 1016 GMT. U.S. gold futures rose 0.5 at 2,189.90.

Investors now look forward to U.S. core personal consumption expenditure PCE price index data for February due on Friday. The index was seen rising 0.3 last month, which would keep the annual pace at 2.8.

The Fed probably needs higher inflation figures to derail the path of three rate cuts this year in the U.S, although liquidity might be thinner due to a holiday in Europe on Friday, said UBS analyst Giovanni Staunovo.

Gold hit a record high last week after Fed policymakers indicated they still expect to reduce interest rates by threequarters of a percentage point by 2024 end, despite recent high inflation readings.

Central banks continue to report ongoing gold purchases, driven by their desire to diversify their currency reserves. This is offsetting the weakness from investment demand, which focuses more on US rate cut expectations, Staunovo said.

Traders are pricing in a 70 probability that the Fed will begin cutting rates in June, according to the CME Group39;s FedWatch Tool. Lower interest rates reduce the…