Gold slips as dollar firms, investors await U.S. inflation data

New York (Dec 9) - Gold prices fell on Thursday, after the dollar firmed, and as investors squared positions ahead of U.S. inflation data this week that could set the tone for the Federal Reserve’s strategy on interest rate hikes.

Spot gold fell 0.4% to $1,774.80 per ounce by 1318 GMT, and U.S. gold futures were down 0.6% to $1,775.40.

The dollar index gained 0.3%, dimming gold’s appeal for overseas buyers.

Gold has traded in the range of roughly $1,760 to $1,790 an ounce, after last month’s fall below the key $1,800 mark, as investors attempted to gauge the pace at which the U.S. central bank would taper its stimulus.

Friday’s U.S. Consumer Price Index (CPI) report will be followed by the Fed’s policy meeting on Dec. 14-15.

If the Fed “enters tapering earlier than they announced at the last meeting, then of course the probability of rate hikes is increasing and that would be a negative factor (for gold),” said Quantitative Commodity Research analyst Peter Fertig.

Reduced stimulus and interest rate hikes tend to push government bond yields up, raising non-yielding bullion’s opportunity cost.

REUTERS