Gold prices pared some losses on Wednesday as bets that the U.S. Federal Reserve will cut interest rates grew after U.S. growth in the first quarter came in weaker than expected.

Spot gold fell 0.2% to $3,308.32 an ounce by 1:58 AM ET (1758 GMT), but was on track for a fourth straight monthly gain, up nearly 6% so far in April. Bullion had fallen more than 1% earlier in the session.

U.S. gold futures settled 0.4% lower at $3,319.10.

Data showed U.S. gross domestic product contracted at an annualized rate of 0.3% in the last quarter, as businesses rushed to import goods ahead of expected tariffs from the Trump administration. "Gold remains confident in a bull market and today's data suggests an easier path to an early Fed rate cut which should be positive for gold," said Tai Wong, an independent metals trader, adding that gold may trade slightly sideways given the recent sharp rally to $3,500.

Clearer signs in June of a faltering economy would prompt the Fed to continue cutting rates, eventually by a full percentage point by year-end, traders bet on Wednesday.

Non-yielding bullion, a hedge against political and financial turmoil, also thrives in a low-interest environment. It last jumped to a record high of $3,500.05 an ounce on April 22.

Meanwhile, the U.S. personal consumption expenditures (PCE) price index was unchanged in March after rising 0.4% in February. Quarterly PCE excluding volatile food and energy components surged at a 3.5% rate, accelerating from a 2.6% pace in October-December. "Gold has so far shrugged off the lowest reading in core PCE since the pandemic, largely due to the earlier sharp rally on a surprise contraction in US GDP," Wong said.

Traders now await the biggest jobs data of the week, the US monthly employment report on Friday, which could shed more light on the Fed's interest rate outlook.

Elsewhere, Chinese markets will be closed from May 1-5 for the Labor Day holiday.

Spot silver fell 1% to $32.64 an ounce, platinum fell 1.2% to $965.30 and palladium rose 0.3% to $937.75. (Newsmaker23)

Source: Reuters