Gold pulls back from one-month high as focus shifts to US inflation


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Gold prices on Wednesday slid by a

1-month high on rising bond yields, while

investors were waiting for US inflation data which is expected

influence the pace of Federal Reserve rate hikes.

Spot gold was down 0.3% at $1,789.29 an ounce, in

0512 GMT, after hitting its highest since July 5 at $1,800.29 on

Tuesday. US gold futures fell 0.3% to $1,806.10.

Benchmark 10-year US Treasury yields fell slightly

greater than 2.7990%, increasing the opportunity cost of holding

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gold not bearing interest.

“Clearly the focus is on inflation data in the United States. Also, what is

really important is that where prices are currently trading with

$1,800 being the very important level here,” said Ilya Spivak, a

currency strategist at DailyFX.

“If the inflation figure is stronger than expected,

after last week’s strong jobs report, we could see some of the

expectations of rate cuts for next year leave the forecasts, which

would be negative in gold.

Economists polled by Reuters expect annual inflation in the United States

fell to 8.7% last month from 9.1% in June. Core inflation

is expected at 0.5% m/m. The data is due

at 12:30 p.m. GMT.

The Fed raised rates by 75 basis points each in June and July

to curb rising inflation. Although gold is considered a hedge

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against inflation, higher US interest rates

the bullion call.

Fed funds futures traders now price a 69.5% chance

another 75 basis point rate hike at the US central

next policy meeting of the bank in September.

“Central banks have warned that further rate hikes will be

needed to control persistently high inflation. Investors are waiting

The consumer price index for July will cool down a bit,” ANZ analysts said in

a rating.

“However, strong wage growth and higher labor costs could

undermine that.

Spot silver fell 0.5% to $20.40 an ounce, platinum

fell 0.8% to $926.48 and palladium slipped 0.5%

at $2,204.55.

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu

Sahu, Sherry Jacob-Phillips and Uttaresh.V)

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