Economic risks put gold on course for monthly rise

April 28 (Reuters) – Gold prices eased on Friday as the dollar firmed in the run up to U.S. inflation data, but economic jitters kept safe-haven bullion on course for a second consecutive monthly rise.

Spot gold edged 0.2% lower to $1,983.01 per ounce by 0915 GMT, but was up 0.8% for the month. U.S. gold futures eased 0.4% to $1,991.70.

While prospects of another rate hike are pressuring gold, bullion was, for the month, supported by the weaker dollar and the “safe-haven trade resulting from fears of an economic contraction and ongoing turbulence in the American banking sector,” said Ricardo Evangelista, senior analyst at ActivTrades.

But “a sudden deterioration in the bank sector crisis could trigger a rush to safe-havens likely to see gold prices soar above previous records,” Evangelista added.

Gold scaled a one-year peak at $2,048.71 in mid-April as the banking crisis unfolded.

The dollar edged up for the day but was headed for a monthly decline. A weaker dollar makes bullion more affordable for overseas buyers.

Investor focus will now be on U.S. core Personal Consumption Expenditures index data for March due at 1230 GMT.

The U.S. Federal Reserve is widely expected to raise interest rates by 25 basis points on May 2-3. Elevated rates dull zero-yielding bullion’s appeal.

Gold investors will be hoping the Fed is close to the final hike in this current cycle, Kinesis Money wrote in a note. “If that does prove to be the case, gold has sufficient support to keep it trading in the high $1,900s for the foreseeable future while hints of further hikes needed may push it back down towards $1,900.”

Also on the radar were developments surrounding the U.S. debt ceiling.

Silver fell 0.5% to $24.82, platinum shed 1% to $1,066.57, while palladium was flat at $1,495.13 — all headed for monthly gain.

Reporting by Arundhati Sarkar in Bengaluru; editing by Uttaresh Venkateshwaran

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