Gold prices eased on Friday as investors digested U.S. inflation report that was largely in line with estimates, although expectations that the Federal Reserve will cut interest rates this year kept bullion on track for its fourth straight monthly gain.

Spot gold gave up earlier gains to trade down 0.7% at $2,326.90 per ounce as of 1:50 p.m. ET (1750 GMT). U.S. gold futures settled 0.9% lower at $2,345.8.

However, bullion was up 1.8% for the month. On May 20, prices hit an all-time high of $2,449.89.

"Gold is down despite the friendly PCE report and softer consumer spending, which could suggest near-term exhaustion in what has been a remarkable rally in 2024," said Tai Wong, a New York-based independent metals trader.

Data showed the Personal Consumption Expenditures (PCE) Price Index rose 0.3% in April, in line with forecasts by economists polled by Reuters. In the 12 months through March, PCE inflation gained 2.7% as expected.

"Multiple Fed governors have said that it will take a few months of softer inflation to convince them it's safe to cut rates. A September rate move remains close to a coin-flip, though odds will increase slightly after today," Wong said.

Traders on Friday added to bets the Fed will deliver a first rate cut in September after a U.S. Commerce Department report showed inflation may have made a little progress toward the Fed's 2% goal last month.

Dallas Fed Bank President Lorie Logan said on Thursday she believes inflation is still heading to the Fed's 2% target, but noted that it is too early to consider cutting interest rates.

While gold is often considered a safeguard against inflation, higher rates increase the opportunity cost of holding the non-yielding asset.

Elsewhere, spot silver dropped 2.7% to $30.34 per ounce, but logged its biggest monthly gain since November 2022.

Platinum climbed 1.4% to $1,038.25, and palladium slipped 4% to $909.71.

(Reporting by Brijesh Patel in Bengaluru; Editing by Vijay Kishore and Alan Barona)