Gold set for quarterly gain; Fed’s Powell comments in focus

Gold ticked up on Monday and was on track for its fourth straight quarterly gain, buoyed by hopes of another large U.S. rate cut and rising Middle East conflict, while investors awaited comments from Federal Reserve Chair Jerome Powell.

FUNDAMENTALS

* Spot gold rose 0.2% at $2,662.3 per ounce, as of 0036 GMT. Bullion closed 0.5% lower on Friday, snapping a six-session rally.

* Gold has risen nearly 15% this quarter, marking its fourth consecutive quarterly increase.

* Data on Friday showed that the U.S. consumer spending increased moderately in August, suggesting the economy retained some of its solid momentum in the third quarter, while inflation pressures continued to abate.

* The data lifted expectations of an outsized interest rate cut at the Fed’s November policy meeting. * Currently, traders see a 53% chance of another half-percentage-point reduction by Fed in its next meeting, according to CME FedWatch Tool. * Lower interest rates reduce the opportunity cost of holding bullion, which is also viewed as a safe asset during economic and political turmoil.

* Israel killed Hezbollah leader Sayyed Hassan Nasrallah in a powerful airstrike in Beirut, dealing a heavy blow to the Iran-backed group as it reels from an escalating campaign of Israeli attacks.

* Market participants’ attention will now turn towards speeches from Powell and Fed Governor Michelle Bowman later in the day.

* On the physical front, gold demand contracted in key Asian hubs last week, as prices hitting record highs deterred buyers and encouraged some to cash in on their holdings.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.59% to 871.94 metric tons on Friday.

* Spot silver was up 0.2% to $31.68 per ounce, platinum gained 0.4 to $1,004.10 and palladium rose 0.2% to $1,013.5.

DATA/EVENTS (GMT) 0130 China NBS Manufacturing PMI Sept 0145 China Caixin Mfg PMI Final Sept 0145 China Caixin Services PMI Sept 0600 UK GDP YY Q2 0600 UK Nationwide House Price MM Sept 0600 UK Nationwide House Price YY Sept 0600 UK GDP QQ Q2 1200 Germany CPI Prelim YY Sept 1200 Germany HICP Prelim YY Sept.