Gold dips after US inflation data sparks jumbo rate hike concerns

GOLD prices slipped on Thursday (Jul 14), as Treasury yields and the dollar rose, with bullion's outlook hurt by fears the Federal Reserve could go for a more aggressive interest rate hike this month after data showed US inflation sky-rocketed in June.

Spot gold fell 0.4 per cent to US$1,728.39 per ounce by 1.00 am GMT. US gold futures dropped 0.5 per cent to US$1,726.60.

The dollar edged up towards 20-year highs, hurting demand for greenback-priced gold among buyers holding other currencies.

Benchmark US 10-year Treasury yields rose, weighing on appetite for zero-yield gold.

US annual consumer prices jumped 9.1 per cent in June, the sharpest spike in more than 4 decades, leaving Americans to dig deeper to pay for petrol, food, healthcare and rent.

Markets swung wildly on Wednesday, as the euro touched parity versus the dollar for the first time in 20 years, while investors also feared larger Fed rate hikes could be on the way.

The Fed is seen ramping up its battle with sky-high inflation with a supersized 100 basis points rate hike at its upcoming policy meeting on Jul 26-27.

Although gold is seen as an inflation hedge, higher rates hurt the appeal of bullion, which bears no interest.

A rallying dollar sent gold prices to a near 1-year low on Wednesday following the inflation report, but a retreat in the greenback helped bullion make a sharp recovery and end the session higher.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.17 per cent to 1,019.79 tonnes on Wednesday from 1,021.53 tonnes on Tuesday.

Spot silver fell 0.4 per cent to US$19.11 per ounce, platinum slipped 0.8 per cent to US$847.75, and palladium eased 0.5 per cent to US$1,964.74. REUTERS

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