Bullion is up around 4% for the quarter.

Palladium is up 5% for the day and down for the third consecutive quarter.

Gold prices held steady on Friday and were on track for a third consecutive quarterly gain after a crucial U.S. inflation report came in largely in line with expectations, raising anticipation that the Federal Reserve may lower interest rates in September.

Spot gold was unchanged at $2,326.47 per ounce as of 1833 GMT. Prices are up more than 4% for the quarter.US gold futures closed 0.1% higher at $2,339.6.

"We are continuing the trend of a very gradual slowing of inflation. As a result, we've seen rates continuing to fall while bonds rise, which is somewhat supportive of the gold market', said David Meger, director of alternative investments and trading at High Ridge Futures.Gold was also boosted by a drop in US Treasury yields, making non-yielding metal more appealing to investors.

On Friday, market bets soared on expectations that the Federal Reserve would lower interest rates in September and again in December, after the Personal Consumption Expenditures Index revealed that inflation did not rise at all from April to May.

The PCE followed an unrevised 0.3% gain in April data last month, while consumer spending rose moderately.

According to the CME FedWatch tool, traders are now putting in around a 68% possibility of a Fed rate drop in September, up from 64% before the inflation data was released.

Mary Daly, President of the San Francisco Federal Reserve Bank and a member of the Federal Open Market Committee for 2024, said the recent inflation statistics was "good news that policy is working".

"The price of gold has been trading in a fairly tight range and will most likely remain there until the FOMC confirms that rates will be cut," said EverBank's president of global markets, Chris Gaffney.

Elsewhere, spot silver rose 0.3%, to $29.15 and platinum gained about 1%, to $997.13. Both metals were set for quarterly gains.

Spot palladium rose about 5%, to $975.45, but was headed for a third straight quarterly drop.