Gold gains as soft US data lifts Fed rate cut bets

"Weaker-than-expected retail sales data brought the dollar lower, and at the same time, yields backed off, so that's providing some upside to gold prices here," said Daniel Pavilonis, senior at RJO Futures. [US/]

U.S. retail sales rose 0.1% last month, the Commerce Department's Census Bureau said. Economists polled by Reuters had forecast retail sales gaining 0.3% in May.

Fed Bank of New York President John Williams said interest rates will come down gradually over time, but he declined to say when the can begin easing monetary policy.

Traders are currently pricing in about a 67% chance of a in September, according to CME FedWatch Tool. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

Gold prices are down 6% from a record high of $2,449.89 per ounce touched on May 20 amid a rally which happened against traditional headwinds such as a strong dollar and high interest rates. [USD/]

As to crucial categories of gold demand, a pause taken by China's central bank in May gold purchases continued to weigh on the market.

However, an annual survey of central banks by the World Gold Council (WGC) delivered its highest share of respondents, saying they expected their gold reserves to increase within 12 months.

Spot silver eased 0.1% to $29.48 per ounce. However, Nitesh Shah, commodity strategist at WisdomTree, expects the metal to get support in the coming months from this year's deepening structural market deficit amid growth in solar panel usage.

Platinum gained 0.7% to $971.56 and palladium was steady at $889.20.