Gold prices held firm on Monday after marking their best quarter in a year, supported by uninspiring economic data from the U.S. and dovish remarks from a Federal Reserve official on Friday.
Spot gold was mostly unchanged at $1,248.21 per ounce at 0329 GMT, while U.S. gold futures were also flat at $1,250.60.
U.S. consumer spending barely rose in February amid delays in the payment of income tax refunds, but the biggest annual increase in inflation in nearly five years supported expectations of further interest rate hikes this year.
The Fed could pause interest rate hikes when it begins shedding its bond holdings, a move that would have little effect on financial markets, St. Louis Fed President James Bullard said on Friday.
“The interest rate hike cycle has set in and that might keep gold in a wide range of $1,200-$1,250 as the opportunity cost of holding non-interest rate bearing gold is more,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.
“But, there are still some uncertainties in the political climate. The two counteractive forces will determine the consolidation within that range, which is very likely to persist,” To further added.
Spot gold may revisit its March 31 low of $1,239.55 per ounce, as suggested by its wave pattern and a Fibonacci retracement analysis, said Reuters technical analyst Wang Tao.
Spot gold notched a quarterly gain of about 8.4 percent on Friday, marking its best quarter in a year, mostly driven by uncertainties around U.S. President Donald Trump’s policies and elections in Europe.
Hedge funds and money managers raised their net long position in COMEX gold for the second straight week in the week to March 28, and boosted it slightly in silver, U.S. Commodity Futures Trading Commission data showed on Friday.
“We think that both the gold and silver complexes will make fresh highs this month ahead of the French elections, but likely fade in their immediate aftermath,” said INTL FCStone analyst Edward Meir.
The main focus for markets this week is on U.S. payroll figures on Friday and U.S. President Donald Trump’s first meeting with counterpart Xi Jinping on Thursday and Friday.
On Sunday, Trump held out the possibility of using trade as a lever to secure Chinese cooperation against North Korea, which analysts think should help gold.
In other precious metals, spot silver edged down 0.1 percent to $18.20.
Platinum rose one percent to $954.40, while palladium was up 0.5 percent at $799.