PRECIOUS-Gold flat ahead of US data, but set for fourth straight monthly gain

* Bullion up 2.5% for the month so far * Nornickel expects global deficit for palladium in 2024 * Silver heads for biggest monthly gain since July 2020 (Updates prices and graphic as of 0726 GMT) By Sherin Elizabeth Varghese May 31 (Reuters) - Gold prices were set for a fourth straight monthly gain, even as the market struggled for momentum on Friday ahead of a key U.S. inflation reading that could provide more indications on how the Federal Reserve might proceed with rate cuts later this year. Spot gold XAU= was unchanged at $2,343.63 per ounce, as of 0726 GMT. Bullion prices are up 0.4% so far this week and 2.5% so far in the month. U.S. gold futures GCcv1 was flat to $2,341.80. The monthly gains are due to "the central bank (buying) element and the residual geopolitical risk story," said Kyle Rodda, a financial market analyst at Capital.com. The market is now waiting for the release of the U.S. core Personal Consumption Expenditures (PCE) price index data, the Fed's preferred measure for inflation, at 1230 GMT. "Ahead of the data, gold prices have been largely treading water... A weaker U.S. GDP read last night may call for imminent policy easing, but much validation will still revolve around the extent of inflation progress," said IG market strategist Yeap Jun Rong. Any upside in PCE could put gold on the back foot but it may take much more to reverse the broader upward trend, with buyers likely to step in to defend the $2,300 level, he added. Data on Thursday showed that the U.S. economy grew more slowly in the first quarter than previously estimated. Meanwhile, traders have dialled back rate-cut expectations after Fed officials recently struck a hawkish tone that suggests a longer route to the 2% inflation target. FEDWATCH While bullion is considered an inflation hedge, higher rates increase the opportunity cost of holding the non-yielding asset. Spot silver XAG= was steady to $31.18 per ounce, but was set for its biggest monthly gain since July 2020. Platinum XPT= was up 0.3% at $1,026.75 and palladium XPD= gained 0.2% to $949.34. Nornickel, the world's largest producer of palladium GMKN.MM , said it expected a global deficit of 0.9 million ounces for palladium in 2024. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Spot gold price in USD per oz https://reut.rs/3yAtkHi ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Subhranshu Sahu and Janane Venkatraman) (([email protected];))