Gold prices on Wednesday were near eight-week highs reached in the previous session after economic data raised expectations that the U.S. Federal Reserve is near the end of its interest rate hiking.
Spot gold eased 0.2% at $1,973.69 per ounce by 1200 GMT, slightly pressured as the U.S. dollar bounced back from 15-month lows. U.S. gold futures also fell 0.2% to $1,977.30 per ounce.
Prices hit their highest since May 24 at $1,984.19 before settling about 1.2% higher on Tuesday.
The outlook for next week's Fed meeting has not changed, but the latest jobs data and inflation figures have begun to anticipate rates could be cut in early 2024, sooner than previously expected, Carlo Alberto De Casa, external analyst at Kinesis Money, said.
"Moreover, markets are almost sure that this rate hike will be the last one for a while," he said.
Economists polled by Reuters also see the July rate hike would be the Fed's last increase in the current tightening cycle.
Higher rates mean that bond prices fall and yields rise, making such investments more attractive than bullion, which does not bear any interest.
Reinforcing uptrend
Capping bullion's gains, European stocks rallied as positive news on UK inflation added to a picture of easing global price pressures.
"The fundamental driver for gold seems to be coming from the real 10-year Treasury yield (TIPS) which is being driven by inflationary expectations," said Kelvin Wong, senior market analyst, Asia Pacific, OANDA.
Since the start of this week, the 10-year TIPS yield has dipped, reducing the "cost of holding" gold that reinforces its ongoing short and medium-term uptrend, Wong added.
Among other metals, spot silver slipped 0.3% to $25 per ounce, while platinum lost 0.5% to $977.59.
Palladium dipped 2.5% to $1,286.21 per ounce after rising to its highest since June 26 at $1,325 on Tuesday.
