BENGALURU: Gold regained some ground on Monday following its biggest daily drop in three-and-a-half years in the last session, as investors awaited US inflation data and the Federal Reserve’s decision on interest rates this week. Spot gold was up 0.5% at $2,303.01 per ounce as of 1405 GMT.

US gold futures fell 0.2% to $2,320.70. Friday’s selloff seems a bit excessive and “bargain hunters are surfacing at this lower price point,” said Phillip Streible, chief market strategist at Blue Line Futures.

“There’s so much data and so many events coming out... so there’s going to be more volatility and more fireworks this week.” Bullion lost about $83 on Friday, declining 3.5% in its biggest one-day drop since November 2020 after a stronger-than-expected US jobs report dented hopes for a September rate cut and news on China’s central bank holding off gold purchases put off investors betting on Chinese demand.

“People’s Bank of China (PBOC) has never been a constant buyer. There have been distinct phases of buying followed by multi-month breaks. But as long as the PBOC doesn’t resume buying, gold prices could trade sideways because the China buying topic is a key market focus,” Julius Baer analyst Carsten Menke said.

Gold’s tentative recovery, however, came despite a rise in the dollar and the US Treasury yields, with market focus shifting to the US consumer inflation report due on Wednesday, the same day as the Fed’s policy decision.

The Fed is not expected to make any change this week, but the focus will be on comments from Fed Chair Jerome Powell and revisions to economic projections from policymakers. Higher rates increase the opportunity cost of holding non-yielding bullion. Spot silver rose 0.8% to $29.42 per ounce, platinum was up 0.8% at $971.20 and palladium fell 0.6% to $906.25.