PRECIOUS-Gold dips on stronger dollar as markets assess CPI data

Recasts, adds comments, and updates prices throughout

By Arundhati Sarkar

May 11 (Reuters) - Gold prices extended losses to a second session on Thursday as the dollar advanced, while markets assessed U.S. inflation data to gauge the Federal Reserve's policy move and awaited England's interest rate decision.

Spot gold XAU= fell 0.4% to $2,022.19 per ounce by 0919 GMT, while U.S. gold futures GCv1 shed 0.4% to $2,029.60.

The annual increase in U.S. consumer prices slowed to below 5% in April for the first time in two years. Although, month-over-month CPI in April rose 0.4% after gaining 0.1% in March.

The U.S. inflation data is still "way above the comfort zone of the Fed," suggesting the central bank may change its rate hike course soon and that has hit gold, said UBS analyst Giovanni Staunovo.

"Near-term debt ceiling talks and U.S. macro data will influence the gold price. Longer term, it could still go higher driven by a weaker dollar and lower real rates," Staunovo added.

The dollar rose on Thursday as the Chinese yuan dipped to a two-month low after more evidence of weakness in China's post-COVID recovery clouded the outlook for the global economy.

Top bullion consumer China's consumer prices rose at the slowest pace in more than two years in April, while factory gate deflation deepened.

Although gold and the dollar are rival safe-haven assets, a stronger dollar makes gold more expensive for overseas buyers.

Separately, Carsten Menke, head of Next Generation Research at Julius Baer, said barring a broader-based and longer-lasting recession, more downside than upside for gold could be seen.

"Sharp short-term swings, such as that experienced after yesterday's U.S. inflation report, seem to have become more common as of late in the gold and silver markets, pointing to increasing ," he added.

Looking ahead, the Bank of England releases its policy decision at 1100 GMT.

Spot silver XAG= fell 2.1% to $24.90 per ounce, platinum XPT= dropped 1.7% to $1,095.37, and palladium XPD= lost 2% to $1,575.81.

(Reporting by Arundhati Sarkar in Bengaluru; Editing by Janane Venkatraman)

((Arundhati.Sarkar@thomsonreuters.com; twitter.com/Arundhati_05; +1 646 223 8780 Ext: 2776))