Gold drops more than 1% as risk appetite grows
S&P 500, Nasdaq notch record highs
Focus on US inflation data due this week
Platinum down more than 2%
Updates prices
By Brijesh Patel
July 8 (Reuters) -Gold prices fell more than 1% on Monday, hurt by a risk-on rally in equities and profit-taking by investors after a sharp rally in the previous session over expectations that the U.S. Federal Reserve could cut interest rates in September.
Spot gold XAU= was down 1.4% to $2,357.88 per ounce as of 2:04 p.m. ET (1804 GMT), after rising to its highest level since May 22 onFriday.
U.S. gold futures GCcv1 settled 1.4% lower to $2,363.50
"This looks like a lot of profit-taking, and the equities are strong this morning here, which kind of has a little bit of a competing factor with precious metals," said Bob Haberkorn, senior market strategist at RJO Futures. .N
The Nasdaq and the S&P 500 hit record highs, while the Dow scaled a more than one-month high. .N
"However, I believe you'll see gold higher based off the prediction that the Fed is going to be cutting rates. The Fed watch tool saw rate cuts coming in September and then another cut possibly in November and December that will be bullish for gold."
Data last week pointed to a slackening labour market keeping the U.S. central bank on course to start cutting interest rates soon.
Markets are currently pricing in a 71% chance of the Fed cutting interest rates in September and another cut in December. [FEDWATCH]
"If we get another downside surprise in inflation data, which we have seen pretty consistently in U.S. data, then that's going to be a tailwind for gold," said Kyle Rodda, a financial market analyst at Capital.com.
Investors this week will be focussed on Fed Chair Jerome Powell's semi-annual Congressional testimony, comments from a series of Fed officials, and U.S. inflation data due on Thursday.
Elsewhere, top consumer China's central bank refrained from gold purchases to its reserves for a second consecutive month in June.
Spot silver XAG= slipped 1.7% to $30.68 per ounce, platinum XPT= fell 2.4% to $1,001.75 and palladium XPD= dipped 1.5% to $1,010.87.
Spot gold price in USD per oz https://reut.rs/4cv5KL3
Reporting by Brijesh Patel and Sherin Elizabeth Varghese in Bengaluru; Editing by Tasim Zahid and Shailesh Kuber
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