09:20 AM EDT, 06/27/2025 (MT Newswires) -- Gold traded sharply lower early on Friday as a key U.S. inflation measure ticked higher last month.

Gold for August delivery was last seen down US$63.70 to US$3,284.30 per ounce, the lowest since May 19.

The U.S. Bureau of Economic Analysis reported the May Personal Consumption Expenditures (PCE) index, the Federal Reserve's preferred inflation measure, rose at a 2.3% annualized pace, up from 2.1% in April, but matching the FactSet consensus estimate. Core PCE, excluding volatile items, rose to 2.7%, up from 2.5% a month earlier and above the consensus forecast for a rise of 2.6%.

The data is unlikely to sway expectations for the Federal Reserve to lower interest rates this year, with the central bank seen likely to cut rates by 25 basis points in September, according to the CME Fedwatch Tool, with a second cut expected before year end.

Still, gold continues to consolidate under its June 13 record of US$3,452.80 despite the likelihood of lower interest rates and a falling dollar.

"Gold's inability to respond to bullion-friendly news, such as this week's dollar and yield decline, highlights a market that remains in consolidation mode, raising the risk of a deeper correction," Saxo Bank noted.

The dollar weakened following the inflation data, with the ICE dollar index last seen down 0.07 points to 97.08 after touching a year low of 97.0 on Thursday. Treasury yields rose, with the U.S. two-year note last seen up 2.0 basis points to 3.748%, while the 10-year note was paying 4.264%, up 2.8 points.