Gold subdued on dollar strength ahead of US inflation data

GOLD prices hovered near a more than 9-month low on Wednesday (Jul 13), with the dollar continuing to hurt bullion demand, while investors awaited monthly US inflation data for cues on the road ahead for the Federal Reserve's monetary policy.

Spot gold was little changed at US$1,726.27 per ounce at 1.06 am GMT, after dropping to its lowest level since late September at US$1,722.30 earlier. US gold futures dipped 0.2 per cent to US$1,721.80.

The dollar steadied at 20-year highs, continuing to make greenback-priced gold less attractive for buyers holding other currencies.

Benchmark US 10-year Treasury yields rose, decreasing the appeal of non-yielding gold.

Economists polled by Reuters expect the US Labor Department's June Consumer Price Index (CPI), due later in the day, to have accelerated on both a monthly and annual basis, by 1.1 per cent and 8.8 per cent, respectively.

Barring a major surprise, the CPI data could coalesce investors' expectations for a 75-basis-point interest rate hike by the Fed later this month, as the US central bank seeks to rein in inflation.

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Gold edges lower as dollar strength takes a toll

Although gold is seen as an inflation hedge, higher rates draw investors away from bullion, which bears no interest.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.17 per cent to 1,021.53 tonnes on Tuesday from 1,023.27 tonnes on Monday.

Spot silver firmed 0.3 per cent to US$18.94 per ounce, platinum rose 2 per cent to US$847.27, and palladium gained 0.2 per cent to US$2,029.90. REUTERS