Gold prices steadied on Friday and were headed for a third straight quarterly gain after a key U.S. inflation report was broadly in line with expectations, boosting hopes that the Federal Reserve could cut interest rates by September.

Spot gold was steady at $2,326.47 per ounce, as of 1833 GMT. Prices have gained over 4% for the quarter.

U.S. gold futures settled 0.1% higher at $2,339.6.

"We are continuing on trend in a very incremental slow pullback of inflation. As a result, we've seen yields continue to creep lower, bonds creep higher and that is somewhat supportive for the gold market," said David Meger, director of alternative investments and trading at High Ridge Futures.

Gold was also supported by a decline in the U.S. Treasury yields, which makes the non-yielding bullion more attractive for investors.

On Friday, market bets rose on hopes that the Federal Reserve would cut interest rates by September and again in December, after the Personal Consumption Expenditures Index showed 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.

Traders are currently pricing in about a 68% chance of a Fed rate cut in September, compared with 64% before the release of the inflation data, according to the CME FedWatch tool.

San Francisco Federal Reserve Bank President Mary Daly - also a member of the 2024 Federal Open Market Committee - said the latest inflation data was "good news that policy is working".

"The price of gold has been trading in a fairly tight range and will probably hold this range until the FOMC confirms they will be cutting rates," said Chris Gaffney, president of world markets at EverBank.

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.

(Reporting by Rahul Paswan in Bengaluru; Editing by Vijay Kishore, Alan Barona and Pooja Desai)