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Gold subdued as investors eye U.S. inflation reading for rate-hike cues

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Gold prices ticked lower on Tuesday, as

cautious investors awaited U.S. inflation data to get clues on

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how aggressive the Federal Reserve needs to be in raising

interest rates.

Spot gold fell 0.2% to $1,721.15 per ounce by 0439

GMT. Prices had hit a two-week high at $1,734.99 in the previous

session as the dollar fell.

U.S. gold futures were down 0.5% at $1,732.

“There are expectations for inflation to become a lot softer

and that could help gold actually run a little bit further as

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expectations could then be for less aggressive Fed hikes after

the September meeting,” said Matt Simpson, senior market analyst

at City Index.

However “more volatile move will come if we don’t see that

happen and that’s where you could see gold really come under

pressure… For us to be confident that bulls have regained

control, we probably need to see gold break above $1,740.”

U.S. consumer price data, due at 1230 GMT, is expected to

show headline inflation rose 8.1% year-over-year in August

versus 8.5% in July.

The reading puts focus on the Fed’s meeting next week. A

Reuters poll of economists expects the central bank to deliver

another 75-basis-point interest rate hike and likely hold its

policy rate steady for an extended period once it eventually

peaks.

Even though gold is seen as a hedge against inflation,

higher interest rates increase the opportunity cost of holding

the bullion while boosts the dollar, in which the precious metal

is priced.

On the day, the dollar index was steady near a

two-week low.

Spot silver fell 0.7% to $19.65 per ounce, having

recorded its biggest one-day percentage gain since February 2021

on Monday.

Platinum slipped 0.8% to $899.97 and palladium

shed 4% to $2,184.67 after falling as much as 4.5% earlier.

(Reporting by Eileen Soreng in Bengaluru; Editing by Rashmi

Aich and Uttaresh.V)



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