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PRECIOUS-Gold dips amid firm dollar, concerns over aggressive U.S. rate hikes

PRECIOUS-Gold dips amid firm dollar, concerns over aggressive U.S. rate hikes

Reuters · 09/13/2022 21:51
PRECIOUS-Gold dips amid firm dollar, concerns over aggressive U.S. rate hikes

- Gold prices edged lower on Wednesday after hotter-than-expected U.S. inflation data boosted the dollar and fuelled expectations that the Federal Reserve will continue on aggressive policy tightening path.


FUNDAMENTALS

* Spot gold XAU= fell 0.2% to $1,698.14 per ounce, as of 0120 GMT. Prices fell 1.3% on Tuesday, its biggest one-day percentage decline since July 14.

* U.S. gold futures GCv1 were down 0.4% at $1,710.

* The dollar index =USD, which measures the currency against six major peers, ticked 0.1% higher after recording its biggest one-day percentage gain since March 2020 overnight. USD/

* Benchmark U.S. Treasury yields US10YT=RR hovered close to a three-month peak touched on Tuesday. US/

* U.S. consumer prices unexpectedly rose in August and underlying inflation accelerated amid rising costs for rents and healthcare, giving the Fed ammunition to deliver a third 75 basis points interest rate hike Wednesday.

* The Fed is likely to raise U.S. borrowing costs faster and further than previously expected after the inflation data, with Nomura's economists saying they believe a 100 basis-point rate hike is the most likely outcome at the September meet.

* 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.

* Holdings of SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.21% to 962.88 tonnes on Tuesday from 964.91 tonnes on Monday.

* Spot silver XAG= dipped 0.2% to $19.29 per ounce. Platinum XPT= edged 0.3% higher to $880.67 and palladium XPD= fell 1% to $2,083.18.


DATA/EVENTS (GMT)

0600 UK CPI YY Aug

1230 US PPI Machine Manufacturing Aug



(Reporting by Eileen Soreng in Bengaluru; editing by Uttaresh.V)

((eileen.soreng@thomsonreuters.com; Within U.S. +1 646 223 8780, Outside U.S. +91 80 6749 6131; Reuters Messaging: eileen.soreng.thomsonreuters.com@reuters.))